Harvesting the sharing economy
Not all meritocracies are fair. New forms of meritocracies are emerging where ideas are harvested into an ownership hierarchy. This results in a system that lures
participants into giving away assets that they would normally keep for themselves or forgo creating altogether. The three behaviors necessary for new meritocracies are the promotion of ideas, hierarchy of ownership, and harvesting .
Good management ~ Innovation
1. Good management obeys customer desires
2. Customers desire more of the same
3. Therefore, good management obeys the desire for more of the same.
This is also known as the innovator’s dilemma1. This means in order to innovate you probably need a steady stream of ideas from some place other than management. Creating more autonomy preserves the idea generating behavior from the dominance of management control.
Lure <> Incentive
An incentive is a reward based on behavior while a lure is merely the appearance of a reward. In a meritocracy where the best ideas win, the implicit assumption is the best ideas are also rewarded the best. This is the idea lure . Lures are traps based on psychological features of humans which place us in disadvantageous positions. In the statement ‘the best ideas win’ no one ever said ‘the best ideas are rewarded the best’, and yet most people will think this is the case because of the reciprocation bias inherent in humans2. What’s worse, the nonmonetary incentives which drive us in our professional lives can also be used as lures with respect to ownership, as we will see in the next section.
A hierarchy of ownership emerges when there is a pecking order of people who have the right to exclude those below them. Hierarchies in ownership can be incentives for people on the bottom (If I work hard and/or gain favoritism, I can increase in ownership3) or for the top (nepotism4 or cronyism5 combined with reciprocation strategy). Inasmuch as ascending the hierarchy of ownership is a mere appearance, the hierarchy is a lure. Another effect of being in a hierarchy for humans is the suspension of autonomic state and6 ethical norms. This means that when in a hierarchy humans discount their own ethical judgements which may include fairness to others and themselves. One place this may appear in is mitigation of the phenomena of negative reciprocation78, which serves as a natural way to enforce fairness in the distribution of goods.
Drive >monetary, autonomy, expression
After a certain amount of monetary compensation, people are incentivized by autonomy and expression (they want to make a ‘dent in the world’ through mastery and purpose)9. All three of these aspects of motivation can be delivered without giving ownership in the resource produced. Since these aspects are actually delivered to workers, they are incentives instead of lures. They can be used as lures when implicit commitments of reciprocation are assumed (e.g. when someone, of their own volition, creates a new product or service (autonomy, expression), but then reputation for creating the asset is absorbed by the company itself (whereas the implicit assumption was the reputation would be given to the creator). Another drive based lure occurs when someone creates a product through autonomy and expression with the implicit assumption of being rewarded based on how valuable the product is, whereas the reward amount is actually at the discretion of the owners. The reoccurring theme here is the property rights to the asset (the rights to exclude others from the value, and therefore the rights to the value) are often implicitly thought to be with the creator because of reciprocity, but they actually are with the owner.
Harvesting >Transferability
When the ownership of a resource decides to use that resource, the question arises of whether the resource can be used. The resource may be a nontransferrable
resource in the sense that it can not be transferred from its creator. Transfer cost, tacit information, and technical know how are all barriers which must be traversed in order for an asset to be utilized. If an asset can be transferred, then the asset can be harvested by its legal owner. Because of this need for transferability we should not be surprised when the lures within a harvestocracy are directed towards transferrable assets.
Explicit ownership >Explicit denial of reciprocation
It is only when a resource is harvested that the ownership is made explicit by the explicit denial of reciprocation. This delay allows time for the lures to be experienced.
Innovator’s solution > Lure, Autonomy, Reclamation
Every solution to the innovator’s dilemma within a hierarchy will include a progression of lure, autonomy, and reclamation. While the lure creates the appearance of an
incentive and the autonomy eliminates restrictions on creativity, the created assets need to be reclaimed after being produced. In this final phase of the
harvestocracy, the assets need to be repurposed in such a way as to mitigate envy in the creators. The more the original creators believe the transaction was fair, the less of a chance that they will engage in negative reciprocation.
Applying the model
In order to determine if a harvestocracy is emerging we can ask three questions: Is there a lure to innovate? Is there a hierarchy of ownership? Can the
resources be harvested? We can illuminate how harvestocracies emerge by asking the three questions of popular economic communities.
Open Source
1. Is there a lure to innovate?
Yes , in the incentive form of reputation and sometimes1011 monetary forms.
2. Is there a hierarchy of ownership?
Maybe . There may be hierarchical reputational distribution in the form of the commit bit12 and dual licensing. On the other hand the ability to fork may mitigate some of reputational power of the original owners.
3. Can the resources be harvested?
Yes . For the most part open source software is written so that others can reuse the code base and/or install the compiled code.
Google 20% time
1. Is there a lure to innovate?
Yes . Autonomy and the implicit reciprocation bias.
2. Is there a hierarchy of ownership?
Yes, in the form of the normal distribution of corporate ownership shares. Some developers have contributed and not received any reward in the form of
ownership: “I have done many engineering/coding 20% projects and other non-engineering projects, with probably 2040% producing “real” results (which over 7 years I
think has been more than worth it for the company). But these projects are generally not rewarded.”1314
3. Can the resources be harvested?
Yes . Any software development done in corporations is normally documented and delivered in such a way as to be reproducible by others in the company.
Cooperatives
1. Is there a lure to innovate?
Maybe . An assembly line on a milk processing plant may or may not be viewed by the owners as an opportunity for disruptive innovation. Monetary
compensations schemes such as eat-what-you-kill15 in the professional services field have been used in the past as an innovation incentive.
2. Is there a hierarchy of ownership?
No . The resources are owned by the members. Every member has one vote on
how the profit or resources are invested.
3. Can the resources be harvested?
Maybe . A member is free to develop a resource that isn’t transferable to others (some hard to understand, and therefore maintain, piece of software).
Having said this, anything about that resource that is transferrable is jointly owned.
Feudalism ~ Meritocracy ~ Harvestocracy
If meritocracy is the negation of feudalism, then a harvestocracy is the negation of a meritocracy. Much like how a meritocracy builds up a principled inoculation against
feudalism, harvesting within the sharing economy builds up a principled inoculation against the arguments for a meritocracy. Just as the argument for meritocracy is
based on efficiency (the gains from freely trading on the market outweigh goods being organized and distributed by a landowner), the harvestocracy argument is the same but inverted (owners developing the optimal creative environment for the creation of resources outweighs creative types directly offering their products on the free market). At the first stage, merit goes to those who create a product. At the second stage, the very definition of merit changes to those who create a shrewd meritocracy
with which to harvest ideas. We may very well need smart people like Steve Jobs, Larry and Sergey, and Linus Torvalds harvesting our ideas in order to reach maximum efficiency, but it may work only as long as we feel good about giving our ideas up.
- http://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244
- https://en.wikipedia.org/wiki/Reciprocity_(social_psychology)
- https://en.wikipedia.org/wiki/Protestant_work_ethic
- https://en.wikipedia.org/wiki/Nepotism
- https://en.wikipedia.org/wiki/Cronyism
- https://en.wiktionary.org/wiki/agentive
- http://www.amazon.com/Behavioral-Game-Theory-Experiments-Interaction/dp/0691090394
- https://en.wikipedia.org/wiki/Ultimatum_game
- http://www.amazon.com/Drive-Surprising-Truth-About-Motivates/dp/1594484805
- http://www.nber.org/papers/w10956.pdf
- http://i.imgur.com/oyBW7ZH.png
- http://www.nber.org/papers/w10956.pdf
- http://qz.com/116196/google-engineers-insist-20-time-is-not-dead-its-just-turned-into-120-time/
- https://news.ycombinator.com/item?id=6223701
- http://www.lawyer-coach.com/index.php/2012/05/21/partner-compensation-plans-the-eat-what-you-kill-ewyk-part-6-of-7/
