Today ‘Virtual Silicon Valley’ platform creator Grow VC has launched a national university program in the US to ignite student entrepreneurs with the entrepreneurial spark. The online venture community and micro funding network has grown to over 10,000 entrepreneurs, investors and experts from 200 different countries.

“We see the student demographic as a cornerstone in building the future of entrepreneurship and venture capital”, says Grow VC Chairman Jouko Ahvenainen. “It’s the students that are going to lead value creation in the new era, it’s them that have to point us in the right direction and lead the change. It all starts at the grassroots,” Ahvenainen continues.

The Community Partner program covers 70 campuses from California to New York, from Washington State to Florida. The program activates undergraduates, graduate students and other academic professionals from schools such as Berkeley, University of Southern California, University of Colorado Boulder, Georgetown, the University of Texas and dozens more. The network has a reach of over potentially 10 000 entrepreneurs, which represents the programs short term goal.

“Students have a pragmatic attitude, applying trial and error to business can serve as a valuable business instinct for building ventures for the future,” points out Grow VC CEO Valto Loikkanen. “Grow VC has always been about democratizing startup funding for when the ‘Facebook generation’ grows up, which makes students and student demographic a clear focus for building the future of investing and startups. It’s with the students that we want to build the future step by step,” Loikkanen emphasizes.

The Community Partners will be incentivized to grow their own personal network, within campuses but also with partners in the startup ecosystem. “The program aims to weave together a net of entrepreneurial campuses, to further boost getting the right initiatives and startups off the ground in the US for more job growth”, elaborates Mr. Ahvenainen. For student entrepreneurs the program offers tools to advance their own ventures and activities, but also engage in building a support infrastructure for student entrepreneurs.

“We are looking forward to seeing the drive and talent of this entrepreneurial group,” states Mr. Loikkanen. “For those that exceed, they can earn a good position within a growing entrepreneurial organization in the future.”

More SMLXL posts on Grow Venture Community (GrowVC) and the crisis of venture funding

Related articles

• Dr. Burton Lee from Stanford Joins Grow VC Advisory Board (growvc.com)
• Topical Discussion on the Regulation in Crowdfunding (growvc.com)
• How can you use the updated Grow VC service? (growvc.com)
• Grow VC Celebrates Its First 10 000 Members (growvc.com)

In one part of Ethiopia, communities are putting the world’s governments and many aid agencies to shame.

You can read the full blog post here

These are:

• New visual outlook and improved usability
• It is free to create and publish investor and start-up profile
• Members can invest 100% of the micro-investment membership fee, you can buy $100 membership and invest that $100
• Grow VC iPhone app.

Though I think there is a bigger story to share. And that is of the idea that GrowVC represents an evolution how start-ups are funded. There is a growing recognition of a dysfunctionality within our money supply system, and that applies as much to venture financing as it does to banking.

But money supply cannot be separated from the trilemma of our current age – which is, when faced with increasing complexity we face three interlinked questions, [1] organisational, [2] social [3] economic. How can we organise better? How can we make for a fairer world? What does economic production and commercial markets look like when faced with institutional failure? The fact is, when faced with this reality people are learning to get what they need from each other.

Communities of interest are a new organisational model

At GrowVC we asked ourselves the following questions, who has the right to invest? Who has the right to be an entrepreneur? Where does knowledge reside in what to invest in and what not? What is risk and what is not? We came to the view that the Human Operating System we are currently co-creating in which networked communications becomes the connective tissue by which we can re-organise and create and co-create in entirely different ways could equally be applied to investing. We believed that everyone could be and should be investing in start-ups. And why not?

The failure of free market ideology

Banks and banking seem very high risk to me at the moment, pension funds are unsustainable, yet we spend extraordinary sums of money persuading people to play the lottery every week, and tell the ordinary Joe and Josephine that investing is not for them? Why? If we reflect on the banking crisis that nearly was a global catastrophe of even more epic proportions, we understand the dysfunctional nature of banks and banking. In the light of some of the greatest austerity cuts in the UK it is clear that ‘too big to fail’ has failed. People’s livelihoods, retirement funds have been wiped out – yet the finance and banking industries are still consumed by their own mythology – a form of myopia which prevents its from comprehending its own excess. And of course it comes down to power – who has it and who does not. I am not saying “away with the banks”, but what I am saying there exists other highly viable models, which should become part of the financial eco-system.

People embrace what they create, we know that identity, belonging and accountability are forged when we participate in the creation and building of things. My belief is that the idea of democratising investing could offer real long term value for society. Better wealth distribution, an acceleration and increase in the number of companies funded, a different type of engagement with investors and shareholders that could become the checks and balances that our society so desperately needs (News of the World and News International or Lehman Brothers spring to mind). And a new organisational model – lighter, sustainable, adaptive. The default setting  is human, inclusive, participatory, open. Representative of a new moral economy. And, Maybe you are an investor, an entrepreneur and a worker all at the same time.

So my advice is become an entrepreneur, become an investor, seek alternative models which are relevant for the world we live in today. As the artist Wassily Kandinsky once said, “every work of art is a child of its time.” And GrowVC is a child of its time.

Further reading: Democratising Financial Capital, “Crowd-funding will never catch on” investment trainee aged 46.

Which business, which industry, which NGO or political organization, democratic or otherwise has not been touched by the impact of our most recent communications revolution? In a breath it seems, businesses defined by their socialness, community, and peer to peer interactivity have erupted in complete violation of the orthodoxy of traditional business, and how that business is made: controlled access to stuff, to information. This is the Gestalt Switch –  today people are using communication technologies to get what they want and need from each other rather than through existing organisations and institutions. Why? Because those institutions have been recognised as being unable to deliver on their promise to society. Because they abuse their position of power, because they lose sight of why they were there in the first place.

So why is access to financial capital any different? In No Straight Lines: making sense of a non-linear world, I make the case and argument that as our world has become increasingly unfair, to the point whereby that unfairness is highly corrosive, people will take action, political action, dramatic action, action with consequences. It is no accident that today, communications tools are being wielded as powerful agents of political change. As much as everything ‘digital’ has affected our world, the point is we are in a social revolution not a technological one. And, as much as we have seen profound change in certain areas of society, the owners of monetary power (banks, venture capital, financing) have seemingly been unaffected by the disruptive energy of a non-linear world until now, other than by their own doing. But what the banking crisis demonstrated is how dysfunctional finance and money markets have become, not only in venture funding and lending but in pensions, the managers of which know they will never be able to properly pay back to society.

So at either end of people’ lives; the creation of jobs and then a happy retirement, the system which should support that has failed. Its not failing, its failed. So where do the new entrepreneurial companies that create the new jobs come from? How will we finance our retirement? We need novel ways to make this all happen.

In the same way that Martin Luther used Gutenberg’s printing press to reform the church, organisations such as GrowVC, or Profounder or Kiva or Zopa, or Kickstarter, to name but a few, are also part of this challenge to financial hierarchies and their positions of power that now serve themselves rather than society at large. And this process is starting to accelerate, (see the Startup Exemption Petition)

Disruption does not ask permission

So disruption does not ask permission, and it never comes from the centre, the future of investing and the kickstarting of innovation requires radical new ways of funding and this will have a significant impact on society. This innovation will flatten  powerhouses of financial capital and if the idea proves as exciting as the ideas explored and brought to life in the writings and pamphlets that led to the French Revolution, then that idea will spread. As Tony Judt wrote in, Ill Fares the Land, (review)

By the time the revolution broke out, this new language of politics was in place, and in so doing discredited everything that had gone before it.

And once you have stormed the Bastille, you don’t go back to your day job. Who is an entrepreneur? Who is an investor? Who has the right to be either? Such perspectives are as skewed as the myopia of those that whinge about professionals and amateurs, and how the internet has destroyed culture. The question to that is who owns culture and who makes it? What we are seeing is a decoupling from the belief systems that have defined our world for generations.

In this process of the democratisation of venture funding, and the creation of a new innovation eco-system (to accelerate deal flow, that creates more companies and that creates more jobs), it has been reported back to me that some American’s believe this could be the re-invention of the American Dream. And Ross Dawson suggests, that a significant shift in capitalism could be coming. As head of vision at Grow Venture Community (GrowVC), I have watched these developments with great interest. I think, in the same way that micro loans work in many countries, rather than pointing to such financing models as ‘only for the really poor’, there is a more fundamental dynamic at work here, that participatory human systems when connected by the connective tissue of communications media can do some extraordinary things. It also I think breaks down the false barriers between who can and who cannot engage in wealth and value creation. This false distinction has corrupted many in their greed, consequently hurting society per se. As John Kay wrote, “Capitalists, are capitalism’s worst enemy – and particularly the market fundamentalist tendency which has been in the ascendant for the last 20 years”. And yet many in the finance and banking world cannot accept even though they were bailed out by states around the world paying millions in bonus’s is fair. In the same way Ann-Marie suggested the starving in the streets of Paris ‘eat cake’, the financial institutions has become detached from understanding their role in the wider society (read here for a selection of posts that explores these issues). So change is gonna come,

Ross believes,

While we supposedly live in a capitalist society, the potential is for new and more open structures to create far better use of capital than we have today. A more fluid form capitalism could transform business and how individuals create value.

The Wall Street Journal,

Federal securities regulators are weighing demands to make it easier for fast-growing companies to use social networks such as Facebook and Twitter to raise money by tapping thousands of investors for very small amounts of shares. The Securities and Exchange Commission is looking at adapting its rules to encourage Internet-age techniques for small companies raising capital. The issue is part of a wider review by the agency into whether to ease decades-old constraints on share issues by closely held companies.

The use of “crowd-funding” techniques has spread in recent years from artists looking to fund creative works to entrepreneurs trying to expand their firms. In a typical example, a company looking to raise $100,000 would use an Internet site to invite investors to buy as much as $100 of shares each.

If all goes well, small companies can raise cash relatively cheaply, while investors get a stake in an innovative business with limited downside risk. The SEC is now considering calls to relax its rules to make it easier for companies to use crowd-funding without having to undergo the full panoply of disclosure and other legal requirements required by the securities laws for share issues.

I don’t think you need to be a community purist – to see the flawed thinking. Reading through the article, of the usual players and companies lining up to bid for local TV franchises, with the same old, same old business models I found myself, making observations and asking all sorts of questions:

• When we are connected up to and across each other, when we can get what we need for each other, why do we need more of what we don’t need?
• A people will only be free when THEY control their own communications – Frantz Fanon
• Markets are conversations, and markets thrive through, commercial trading, knowledge and information exchange and entertainment, hence the role of the creation of a thriving market place is not about shoving stuff down tubes. Its not one way, and reality of the role of producer and consumer has collapsed.
• Those companies that use revenue sharing to open up, stimulate, motivate and create a rich diverse eco-system are those that are commercially thriving: GrowVC, Qustodian, Android, NTTDoCoMo, Threadless,  are but 5 examples. So why is local TV any different?
• Ask who uses a search engine = 99%? and what are we searching for? Knowledge and information. And we judge the quality of that knowledge and information by its ability for us to take and make decisions and transactions, right now, in 5mins time, this afternoon, tomorrow – we live in the intention economy.
• Where is mobile in all this – because when we have a mobile penetration of 120%+ in the UK but millions cant get in online, surely local commercial communications, must be supported by mobile services? Qustodian certainly believes so, hence their growing relationship with Atletico Madrid. Because local is community – community is local. But this truth does not serve the needs of national media players.

So how on earth do media companies believe they can fund their business models out of the institutional failure of paid for push advertising? The article quotes Pat Loughrey, former BBC director of nations and regions, says: “It’s arse about face. It would be a pity and perverse if what is created a just another metropolitan-dominated TV service, in which the UK is only viewed through national perspective and serving national advertisers.”

Related articles

• Channel 6 bidders explain why Local TV will work (newstatesman.com)
• Two more join bidders for national TV channel (guardian.co.uk)
• DMGT chief voices doubts over Jeremy Hunt’s local TV plans (guardian.co.uk)
• Dyke outlines plan for 80 local TV stations in UK (newstatesman.com)
• How impartial is Jeremy Hunt? (newstatesman.com)
• Ofcom delivers local TV report to Department for Culture, Media and Sport (blogs.journalism.co.uk)

Did the Church see Gutenberg coming? I asked this question recently at an event on innovation and disruption. Those of you that are fans of Blackadder, let me use the comedic twinning of Rowan Atkinson as Bishop Blackadder and his side-kick Tony Robinson as Baldrick.

So Baldrick comes running into Bishop Blackadders bedroom as he is preparing for his day

Blackadder: ahhhh there you are Baldrick, I wondered when you might turn up

Baldrick: sorry sir, I was out last night in the Tavern

Blackadder: the Tavern Baldrick, have you taken leave of your senses

Baldrick: well no sir, but I ended up over-hearing a conversation between two men, a Johannes Gutenberg and some other geezer, that, that, that, that,

(Baldrick pauses)

Blackadder: c’mon man out with it

Baldrick: that could change the whole power base of the church sir – Gutenberg has taken a wine press and he’s going to print bibles on it sir

Blackadder just stares at Baldrick, and slaps him around the head, knocking him over and then kicks him

Blackadder: POPPYCOCK Bladrick (turning to face the window looking out onto the town of Mainz and its surrounding countryside) As Bishop Baldrick, I rule everything I see, and even that which I don’t. How on earth do you think that some fool up in a garret in Mainz with a convertible wine press is going to reform the church, and remove our strangle hold over the whole of Europe, hmmmmm?

This particular question has a certain relevancy if not urgency today, as it was through Gutenberg’s invention we as a society moved from the Dark Ages into the Reformation. The Church controlled all, its omnipotence felt by every single European man woman and child. Yet within a brief decade of the printing of the 42-Line bible and the facsimile re-creation of Gutenberg’s printing press, between 8 – 20 million books had been printed, whereas before, none had existed outside of a monastery. Martin Luther unleashed of the power of the printing press to decouple the Church from its divine power base, whilst simultaneously challenging political stability.

The lesson is – when new communication tools are not only invented but ubiquitously adopted, they can become a tool wielded for profound societal and political change, if society wills it.

So lets ask another question; which business, which industry, which NGO or political organization, democratic or otherwise has not been touched by the impact of our most recent communications revolution? In a breath it seems, businesses defined by their socialness, community, and peer to peer interactivity have erupted in complete violation of the orthodoxy of traditional business, and how that business is made: controlled access to stuff, to information. This is the Gestalt Switch – once we were atomized but connected up to each other by big media but not across each other, today that power has eroded, people are using communication technology to get what they want and need from each other rather than through existing organisations and institutions.

In 2005, Facebook, and YouTube were born – we were aware of the emergence of digital communications but that was seen from afar, there but not here. Today Facebook has a congregation of 500 million people connecting and getting stuff done though its platform, Youtube uploads 20 hours of audio visual content every minute of every day of every year, Flickr holds the largest repository of still images anywhere in the world – but why all this sharing? Because, as USC Professor Henry Jenkins states, an expert on participatory cultures, we were ready for it. Linux is a co-created operating system, (which companies like IBM use) generating huge sums of money for those that build businesses around its services even though the operating code is free and the people that write the code do so for free. From a traditional standpoint it is illogical, yet it works.

At the same time we are using the words social media and social networking, which drip off our lips like an adman would say 60 second TV spot 15 years ago, it seems people are all atwitter about twitter and the CBI produces a report about how employees using “social media” during their working hours are losing the UK millions. The truth is the connection of participatory cultures, socialness and a communications revolution in the true context of our age has been misunderstood by many.

In The Enterprise of the Future a report published by IBM in 2006 – their survey of CEO’s revealed that 8/10 CEO’s saw significant change ahead and yet the gap between expected levels of change plus the ability to manage it had tripled. This is natural because as a new economy takes hold, as a consequence of the old one faltering, it unleashes a powerful set of forces that cleave the fabric of the economy along fault lines, consequently there is a catastrophic resistance to change. For example, social media from a business context is easy to dismiss, it is looked at with idling curiosity, or downright mistrust in the C-suite as it is not a core part of daily grown up business, sadly this is the same mistake which the church made in misunderstanding Gutenberg in his garret in Mainz.

The reality is people are a highly participatory social species, we are designed to work in aggregates, this is different to the logic that created firms perfected for industrial production. We are in the process of renegotiating that power relationship. What companies face today is a design problem and part of that problem is understanding that embedding socialness into the core of what makes a company work successfully is very different to thinking about social media as an addendum to what it does. It requires a new philosophy, language, media and communications literacy, tools and processes. There are companies which whether it be automotive; Local Motors, venture funding; GrowVC, scientific innovation; innocentive, YourEncore, or Topcoder which has NASA as a client, books; Amazon or book mooch, mobile marketing; Qustodian, trading; ebay, that have all embedded socialness into the DNA of the company to improve commercial success. So is it social media or social business – as answering that question might be more important than you think.

Related articles

• Trend for 2011: Collaborative story-telling on social media (reportr.net)
• Facebook Nation, Facebook World (lewrockwell.com)
• Gutenberg In The Middle East (andrewsullivan.theatlantic.com)
• The Gutenberg Bible. (jwitness.wordpress.com)

The whole spectrum of sciences, including vitally important areas such as cleantech, life sciences and biotech, and engineering, is facing extreme upheaval, particularly related to the funding of scientific research. In an overall difficult economic situation, cuts by governments in the area of blue-skies research and less funding available from corporates have created an environment in which the funding of science that is not immediately of commercial value is seen as unnecessary, imprudent, and wasteful.

At the same time, scientific advancement has been very rapid, and tremendous progress has been made in all areas of science. But this has come at a price, quite literally: scientific research is expensive, it takes place at a very high level of complexity, and some of it is speculative with often long and rarely direct routes from idea to commercialization.

A sustainable answer?

Finding a sustainable answer is important, Lucy points to the complexity of funding science, its long gestation, and the increasing desire by VC’s for short-term gain and a decreasing appetite for “risk” as they perceive it. Informed and prudent investment decisions thus require a new level of sophisticated scientific expertise, and most venture funds are not well equipped to do this. As a consequence, they seek the comfort and greater certainty of later-stage investment that comes with a proven idea and income stream on its side. The question arises then is the VC model broken, or broken enough to be rethought?

Innovation eco-systems and architectures

Lucy argues: If retaining their positions as world leaders in scientific exploration and its commercialization is vital to the G7 economies, what needs to be done and are we willing to do it? The gap that needs to be covered is between the origin of an idea and that stage in its development where its successful commercialization is more likely than not. Early-stage investment funds can play a vital role in bridging this gap: they pick up where notional research leaves off but well before the commercial value of a discovery has been completely verified. Early-stage investment funds thus provide the answer to the question of who decides what gets funded because they bring together scientific experts with venture capitalists — those who understand the complex science behind the idea right at the point of due diligence and those who have the business acumen to vet business plans, fund them, and guide their implementation.

And one cannot argue with that, so what to do? Those economies, argues Will Hutton prepared to stay open and create national innovation architectures that support a diversified landscape of vigorous firms, institutions and technologies will repeat the amazing feat of the British Industrial Revolution at the end of the 18th Century – But such innovation eco-systems will not be created spontaneously we need to develop an interconnected eco-system that can respond to these dilemma’s by designing answers that today do not exist. Something that the many people I met in Boston recently were at pains to point out to me. This eco-system is created out of networks or networks which are both local and global. These new models of entrepreneurship, argues John Seely Brown, are built upon also the human talents of deep listening, recipricocity and embedded trust in networked knowledge flows. The eco-system in Boston has a thriving situated community around Boston (academia, entrepreneurs, mentors that want to give back and angel + VC funding, and whole support infrastructure), they use mentoring extensively, in a recent conversation with Sherwin Greenblatt of the MIT Venture Mentoring Service, he explained to me how anyone at MIT (staff or students) can use the service, and that recently a great success was the sale of a drug delivery system innovated at MIT which had been in gestation for 8 years. In fact the eco-system for funding innovation and bringing that innovation to market is central to how science is funded. Equally the MIT Industry Liason program is very good at attracting inward investment into MIT. This is structured in such a way to be of huge incentive for academia to engage with the commercial world. And a case in point is a large company investing $70m over 5 years into a particular form of life sciences, and then hiring quite a few MIT grads consequently.

In a post I wrote on the challenges with big pharma, funding, accelerating innovation I quoted John Martin who was writing in New Scientist,

There is another way to fund the development of new treatments. Many innovative ideas that have changed society have arisen from the combination of curiosity and academic freedom found in universities. This is where small amounts of funding can produce big results. In recent years, university research has been exploited by industry to produce new drugs, such as blood clot-busting “tissue plasminogen activator”, courtesy of the Catholic University of Leuven (KUL) in Belgium.

Now, while big pharma has so much money it doesn’t know what to do with it, universities are being starved of resources and research funding has decreased in real terms. At the same time, university research strategy is under-organised and there is ignorance of how to exploit intellectual property and utilise patents. Nevertheless, the potential of universities is enormous.

So the problem is not just VC’s – its the eco-system they exist in and the way in which innovation and scientific breakthroughs can be made – it is essentially a design problem. Gordon Brown, our recent PM visited MIT and consequently wanted to create something similar in the UK – but we have not been successful, and that has a great deal to do with culture.

Open Innovation

Another aspect which we should consider is the emergence of new platforms for venture funding, and new approaches to innovation. The answer is yes, and it comes from an unexpected and unrelated corner of the universe: open source software development, argues Karim R. Lakhani, an assistant professor at Harvard Business School. His research leads to these conclusions:

1. Practices in the open source software community offer a model for encouraging large-scale scientific problem solving.
2. Open up your problem to other people in a systematic way. A problem may reside in one domain of expertise and the solution may reside in another.
3. Find innovative licensing ways or legal regimes that allow people to share knowledge without risking the overall intellectual property of the firm.

TopCoder is one very good example: TopCoder is a company which administers contests in computer programming. TopCoder hosts fortnightly online  competitions — known as SRMs or “single round matches” — as well as weekly competitions algorithm in design and development. The work in design and development produces useful software which is licensed for profit by TopCoder. Competitors involved in the creation of these components are paid royalties based on these sales. The software resulting from algorithm competitions — and the less-frequent marathon matches — is not usually directly useful, but sponsor companies sometimes provide money to pay the victors. Statistics (including an overall “rating” for each developer) are tracked over time for competitors in each category.

Karim Lakhani believes,

Open source collaboration is a very different model for innovation and product development than most firms are used to. I began to wonder where we might see similar patterns occur outside the software domain. In open source communities we see a vast degree of openness in which everybody can participate, but also the practice of broadcasting your work to everybody else. People continually broadcast their problems, others broadcast solutions, and the person with the problem is not always the one with the solution. Oftentimes, somebody else can make sense of both what the problem has been and what people are proposing as solutions, and can come up with a better answer.

Something I explore in a summing up presentation I gave at the conference Competing to Innovate which was held at MIT/Sloan School of Management in Boston 12 January 2011.

He makes the point that his waking hours seem overwhelmed with the words open, openness, open innovation, crowd-sourcing and crowd-funding.

I emphasize this because openness has become quite the buzzword over the last decade, and I worry that people are starting to attribute near-magical powers to it. I wonder if books like Here Comes Everybody: the Power of Organizing Without Organizations by Clay Shirky, or The Wisdom of Crowds by James Surowiecki are over-selling the idea. Being in Silicon Valley I hear a lot about startups based on a “crowdsourcing” business model, or new open source projects run by people who assume that just because they open-source their code, they’ll magically get contributors. Lately the phrase “… ANYONE can participate!” seems to be de rigueur in every presentation.

Indeed, and I for one am a champion of a different way of doing things, a more humane way of doing things. But I also know from the projects I am involved with, and some other organisations that I know – open innovation requires hard work.  Just because you are open does not mean people automatically will join in – you have to become attractive and understand there are some real and important dynamics to ignite cooperation.

Let’s say I’ve got an idea for a software project and I want to make it open source. So I put up a public code repository on my website, write a page about my patch submission policy, and start an email list for discussion. Great! I’m done now, right? I can declare my project “open” and go back to hacking now?

This project may be “open” by a technical definition, but if you look at the commit log, I’m still the only one working on it or using it. Where’s my windfall of free volunteer effort?

What is the framework, legal, social, how might one design a process that attracts a community of practice to form? Threadless seem to have got it right, as have Local Motors – we also see a great deal of energy expended in Fan Fiction, For example Harry Potter Fan Faction has produced 65,000 individual fan created stories, yet Warners did not understand or comprehend that harnessing and engaging in co-creation and fan fiction could be commercially valuable to them – all they saw was theft. So Fanfiction offers affinity spaces for the passionate to gather vs sending out cease and desist letters. And GrowVC the worlds first Venture Fund, funded by a global community has already $23m in funding, 5000 global members, generated 1000+ members in 8 weeks with its Indian Community Platform and has just launched in China. Jay at Local Motors talks about economies of scope vs, economies of scale, I suggest that velocity is another concept we need to address: ergo, how does an open approach to design, manufacture, etc., deliver at speeds that an industrial approach could not? And of course there are two sides to this story [1] people, what motivates us [2] technology that can aggregate human cooperation. And of course the grandaddy of all this is LEGO that has used a co-creation approach for a very long time as a core part of its business process.

We need to become ” network literate”, literacy is a word both Henry Jenkins (link to media literacies) and Howard Rheingold (video) use – therefore more words at our disposal and the more sense they make they enable use to become more dexterous, like a craftsman (The craftsman and modern society), (The craftsman and the special human need to be engaged). Craftsmen and woman have a wide ranging language to describe their tools and how to apply them, the combine both head and hand – therefore we need to become modern day craftsmen and women, where we can apply common sense with our new found literacy to know; how to act, and, what to do as individuals, companies and organisations.

Sometimes common sense is not always that common

Jono observes,

This should be common sense. Openness is a policy choice, not a replacement for old-fashioned hard work. I happen to think it’s a good policy choice in many cases: An organization that is open to outside ideas and criticism will learn faster about its own mistakes. It can build more trusting relationships with its users, because it doesn’t have to keep secrets. It attracts self-motivated contributors, and it get more diversity of viewpoints. There’s that old mantra about how “with enough eyeballs, all bugs are shallow”. Open-source code can travel farther and do more because there are fewer restrictions on its use. Codebases with an active community can evolve more quickly and not go obsolete so fast. So there are a lot of benefits; but openness is not a free ride.

So when trying to learn from the success of projects like Linux and Wikipedia (and Mozilla, for that matter), don’t stop at “openness”. The questions to ask are: How does a new person discover the project and make their first contribution? How do they discover what work needs to be done? How does the organization make this discovery path easier or harder for people? How does it integrate and organize contributions? How does it set goals? How does it maintain a coherent vision? Under what circumstances does it reject a contribution?

Roland Deiser in his excellent book Designing the Smart Organisation writes,

The imperative to innovate and reinvent oneself in these changing contexts has become ubiquitous, and permanent. The capability to learn is not just nice to have; it has become a key factor for survival – not only for people, but for organisations, industries, and our global society.

and he makes this telling point,

Organisations need to learn to let go of operational control of non-strategic activities and learn to act successfully in networks. Giving up control is a major challenge, one that has little to do with teaching knowledge or skills but with developing the social and political skills to orchestrate a companies stakeholder universe.

The traditional leadership model of command and control works fine within the boundary of each organisation of the network, but hierarchical power does not work between the memners of a network that co-creates. The interplay between the players needs horizontal coordination and adjustment processes, and these follow the logic of leading without formal power.

Indeed as Jono observes: Successful open organizations aren’t just unorganized mobs, as Roland points out. As we de-couple from the 20th Century we are faced with the dilemma of transition, the more we understand how to do that the better.

As many of you know the No Straight Lines project is picking up apace (sxsw keynote) (Do Lecture) (Latin America tour – to come). As a consequence of the work I have been doing with a small team, we have identified that the connected and networked world presents a design challenge to existing companies but also to entrepreneurs – how business and entrepreneurship is taught and how it can be accelerated. The rise of networked platforms like GrowVC which are designed to unleash innovation via crowdfunding is but one example. Another is Local Motors, or indeed mobile developer communities which are bringing a different type of rocket fuel to the party. (also see dotOpen)

On 17th November I will give a keynote on No Straight Lines at Incubate 2.0 on business creation and organization – as what is clear to me, that the networked world must be addressed not through social media per se, but a much deeper and broader understanding of the networked and its implications. For example, how does one leverage open social systems, global connectivity, open innovation and its implications from a skills, tools, process and legal frameworks, and, lightweight (green) business practices to create companies in the future? We need to design and build smart organisations, and understand mutuality as a business model.

The benefits of designing the smart organisation, coupled with the smart business model – purpose built for the needs of 21st Century culture and commerce gets us to ask these types of questions:

1. How does a company decrease the cost to build a car 100 fold whilst also halving the time in development?
2. How does a company perfectly match supply and demand?
3. How does a company use its employees to achieve business and commercial success greater than a $billion ad campaign?
4. How does a fashion retailer make €83m from mobile phone sales?
5. How does a company achieve a 29%+ response rate to its marketing with the subsequent uplift in sales?
6. How does a company spend $60,000 and get a $45m return?
7. How does a hybrid business model of [1] Freemium [2] Subscription [3] micropayment work to generate significant revenues?

From an incubation perspective – incubation has been done traditionally within a space and mostly as a real estate play or an economic development play. Now there are virtual groups allowing and enabling rapid flows of information to be created and shared – networking simultaneously with the creation of multinational micro-corporation, with funding provided by crowds. I argue, the way to start a business today is by being networked, and the way to run these businesses is networked (which is more efficiently done when it was conceived in a networked environment than when you have to transition from a straight line business).