Governance

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Working definition: Governance is a means of direct influence for a system or organization.

Generally, this involves selection (choosing by decision) and enforcement (enacting and reinforcing the choice).

Other possible elements include inquiry or research, sense-making or structuring, informing, polling or voting, feedback, and adaptation.

Open Value Networks present a wide array of potential governance applications and scenarios, calling for the development of a modular pattern language which enables swift configuration of governance recipes to suit needs.


Function

  • confers permissions and privileges amongst actors in the OVN
  • addresses alignment of stakeholders within a space or project
  • specifies mechanisms for decision making, including triggers for the process, steps to be taken, who to involve, and how
  • provides the structures through which objectives are fulfilled
  • monitors implementation of policies and decisions for compliance

Elements

  • decision model and free initiative (what types of decisions do we need to make)
  • governance mechanisms (ways to make decisions, and mappings to decision model)
  • governance structures (committees, offices etc. and mapping to decision model)
  • authority (granting specific people offices)
  • communication (recording and transmitting relevant and timely information)
  • accountability (for both making the decisions and the outcome of the decisions)

Features of peer governance

Openness

Openness is about access to governance processes.

Rationale: In general, openness is crucial for enabling the large scale dynamic in which resources and collective intelligence reaches the network from all over the planet. When it comes to governance, openness is leveraged to include multiple perspectives into a decision making process. Openness is based on the principle of 'equipotentiality', assuming that any human being has the potential to add something positive to the organisation.

Important note: At the same time, the governance process is a sensitive one and thus we need to consider it as a vector of attack. Openness in governance doesn't mean that anyone can come and make decisions about everything within the OVN. It means that pretty much anyone out there can earn the privilege to participate in governance. Access to governance in an OVN is granted based on merit, see more on benefit redistribution algorithm.

In closed governance systems, access to governance is granted by other actors, based on a process that relies more or less on their will. In open governance systems merit is defined by an lgorithm and the access to governance becomes detached from human intervention, once the algorithm has been decided. As a corollary, open governance assumes that these algorithms are also open (anyone can propose improvements), transparent (anyone can see how they work) and legible (they are easy to understand).


Transparency

Transparency is about access to information about governance.

Rationale: Transparency means that almost anyone out there can see, without the need to make a formal request for information, how the network is governed. This means unrestricted access to the operating rules (even to information about why and how these rules have been put in place), to past and current decisions, to governance processes and tools. Transparency is based on the principle of holoptism - ability for any part to know the whole, to have horizontal knowledge of what is going on, but also the vertical knowledge concerning goals and aims. The advantage is that all the nodes of the network can be aware of important choices / decisions, and of how obligations and permissions are assigned. Moreover, transparency builds trust in the system for participants, as well as and for other agents that want to interact with the network.

Important note: At the same time, transparency provides real time information about important choices made by the OVN to competitive agents within the larger ecosystem, which can become a disadvantage. This is akin to the predator having access to the thought process of the pray, predicting every move even before it happens. The only defense in this situation of information asymmetry within a competitive environment is to become the lion of the savanna, i.e. to have no threatening competition in the area of the OVN's core expertise.

Secret, closed organizations are based on non-transparent governance.


Decentralization

Decentralization is about autonomy of agents within the OVN.

Rationale: The idea is that good decisions are made by agents in context, based on local conditions. Providing autonomy, or the ability to make decisions and to play by own rules, in context, can lead to very efficient processes. We also need to take into consideration that part of the resources used within an OVN are under a private property regime (affiliates provide resources), which confers affiliates influence within the OVN. In other words, unlike in a traditional company where all things belong to the company and all workers are not in possession of the means of production, in an OVN some affiliates are in possession of means of production. This reality makes it almost impossible to exclude these affiliates from governance, therefore centralized governance is incompatible with open networks. To expand a bit on this subject, within an OVN resources belong either to a custodian (bound by a nondominium agreement) as commons or pool of shareables or to affiliates.llocation of resources is a matter of individual informed choice (for individually-owned resources) or a matter of established governance for shared resources. See more on Physical resource governance.

Important note: Sometimes peripheral agents making decisions based on local conditions are not aware of the big picture, and the network can loose its cohesion.


Horizontal Forms

This is about instituted power relations: Within an OVN there are no formal mechanisms through which one affiliate can control another one.

Peer production processes are structured with the help of formal systems of roles or accountabilities (describes what members do) and reputation (describes how well members do what they do), through voluntary subordination. Peer pressure represents a type of informal feedback loop with significant effect.

Rationale: Instituted power corrupts. Within an organisation that has objective goals people should control their activities, processes in order to achieve their goals, not each others. People contribute to an OVN at will and act as free agents, to reduce friction to a minimum, to make the network dynamic and adaptive. Instituted power relations shift the focus from optimizing incentives and processes to controlling agents, which is not the best way to improve innovation and production.

Important note: Some people misunderstand the situation and in absence of instituted power exerted on them they try to dominate others.


Free initiative

This is about one's ability to start something without the need for approval.

A good initiative is one that increases the probability to improve the organisaton or its products, and by the same token increases the probability for additional benefits for affiliates. A "bad" initiative is one that causes harm to the organisaton as a whole or to some of its affiliates. Sometimes we perceive bad initiatives those that are not intended to cause harm, but might be wasteful of waste resources. Usually, this type of initiatives don't attract attention or resources to go forward, but there is no penalty for trying. The OVN is a Darwinian environment for ideas, in which the good ones get traction and the bad ones are neglected and forgotten. An good initiative that fails is still a learning opportunity.

Rationale: Reduce bureaucracy, lower barriers to innovation, agile, fail fast.

Important note: Some actions require very little effort but can be harmful and even irreversible. Such actions are vectors of attack and in this case free initiative should be closely watched, peer reviewed and potentially sanctioned. For example, publishing something that can tarnish the reputation of the OVN, using the OVN's brand, as if it is done in the name of the OVN.


Some conditions must be fulfilled in order for free initiative to become a benefit rather than a burden

  • The value system is transparent and legible, everyone can see the big picture.
  • A transparent reputation system is in place.
  • The digital environment provides tools for sharing and broadcasting new intentions and allows affiliates to monitor, discuss and contribute.
  • All initiatives are open to allow others to participate, to oppose initiatives or provide alternatives.

It is the responsibility of the initiator to rally support and resources for his initiative. The individual choices of members with higher reputation will have an impact on other members. This is how skills, talent and capacity are included into this process.

The advice process Free initiative is related to the advisory decision making process, where anyone can make a decision if

  • the individual seeks advice from experts
  • the individual seeks advice from those who will be concerned by the decision

The magic of the advice process is that the person making the decision is entirely responsible for the decision and its outcome. This concentrates the mind, and forces them to really seek out advice and pay attention to it, because ultimately it’s their decision and the network (which hopefully includes people they like to get on with) will have to live with the consequences of that decision.

Important: this is about getting feedback/input into your decision, not about building consensus. Do not use the advice process to try and browbeat people into agreement or to build political support for your decision. You don’t need people to agree. You don’t need political support. You just need input to make sure that you make the right decision.

This is a decision model that works very well to replace both the top-down decision model and the consensus-based decision model, both of which have serious flaws in practice and theory both.

Temporal aspects

Proposed by Steve: Some decisions can be definitive, for others the implementation of the decision has an evaluation process attached to it, and it is meant to be revised at some future date. Active affiliates can be pat of the evaluation process, revision and adaptation of the decision.

Levels of participation aspects

OVNs exhibit a long tail distribution, or a 1-9-90 structure, where 1% of participants in the network are core, 9% are contributors, and 90% are occasional contributors. OVN affiliates have different needs and interests, depending in which one of these 3 groups they are situated. They can migrate between these groups. The level openness of the network is in fact related to the mobility between these groups.

Governance must be sensitive to this universal long tail structure of OVNs. Those in the core group, the 1%, bare more responsibility and have a much larger workload on their shoulders. They are also very concerned by the viability of the network, therefore their decisions will be motivated by maintaining or improving the health of the network. Contributors, the 9% group, want to help, but are not fully committed. Those in the 90% group share the same values and act as a connection between the network and its surroundings. It is important to understand how to compose a decision making body, for a specific type of decision. See more in the following video : Samer Hassan on Online Tools to Increase Participation in Collaborative Communities.

Access to governance

The problem with open systems is that their contribution statistic follows a long tail distribution. This means that there is not clear delimitation for who's in and who's out, but rather a continuum of engagement or participation intensity. The question now becomes who should take part in decision making? Should someone who contributed something small long time ago be included? Should those who are contributing a lot at the moment of the decision have more influence?

The main goal here is to create organizations that are able to make good decisions, in effective time. Based on context, groups must design access to decision making that brings in the people who can make the best decision, taking into consideration potential conflicts of interests and different types of social dynamics. For example, in some cases it is wise to bring into the decision making process distant stakeholders that are not active in the project, just to get their outside opinion or perspective into the decision. If the decision requires technical skills and local knowledge it is wise to invite people who have an informed and up to date opinion. If the issue is time sensitive, those who are in it at the moment might be the best ones to include.

The [NRP-CAS] collects activity and can be used to algorithmicaly filter participants in decision making, based on the type of the decision. We call that the Governance equation.

Layers of governance

Sensorica and Metamaps are working on governance documents.

Examples from Sensorica

Network of networks governance

The OVN structure is fractal. We can see an OVN a network with nodes that share protocols and standards for value creation and distribution. The governance at this level is influenced by the nature the relations it has with its environment (other networks, government, market, suppliers, benefactors, etc.).

  • Protocols and standards for
    • Contribution accounting and transactions/exchanges - creating interoperability between projects in different networks, considered as autonomous open business units.
    • Role system and Reputation system - roles and reputation need to be transportable across networks
    • Content management - creating documentation that can be effectively used across multiple networks,
    • Physical and virtual environment - creating a unified user experience across networks

Network governance

Networks are clusters of interests. As social systems, they have their own identity and culture. They are also considered as loci of knowledge and knowhow, with specific capacity for design, production and distribution. The governance at this level is greatly influenced by the identity and the culture of this specific network, by its mission(s), as well as by the nature of its value system, i.e. the type of resources used, their availability, the nature of its internal processes, the relations it has with its environment (government, market, suppliers, benefactors, etc.).

At this level, governance is concerned with

  • Custodian agreement (see Legal structure)
    • issuing and revoking the mandate of network Custodian to a entity
    • defining its roles and its responsibilities
  • Network Exchange Firms
    • issuing and revoking the mandate of network Exchange firms to a legal entity
    • defining its roles and its responsibilities
  • Access to Resources (physical and virtual spaces, tools and equipment, consumables, use of brand, etc.)
  • Governance equation at network level
  • protocols and standards for
    • contribution accounting and transactions/exchanges - creating interoperability between projects within the network, considered as autonomous open business units.
    • role system and reputation system - roles and reputation need to be transportable across projects within the network
    • content management - creating documentation that can be effectively used across multiple projects within the network
    • physical and virtual environment - creating a unified user experience across the network

See also Physical resource governance page. It describes the governance of physical spaces, tools and equipment as well as consumables.

Project governance

Projects are governed independently within a network. They are seen as open, collaborative/participatory enterprises. At this level, governance is concerned with redistribution of revenue, which is regulated by the Benefit redistribution algorithms and is enforced by the Benefit redistribution Agreement. See also Governance equation at project level.

Embedded governance

Embedded governance (or immanent governance) is about engineering the environment in which action takes space, or the process, to direct, channel or shape action, to take away the possibility of undesirable or less desirable action alternatives. The true act of governance is the decision to shape the space or the process in a given way, which will subject all actors to that particular design. Once that design decision has been made and it has been implemented, the rules become embedded or immanent. For example, if we don't want people to walk into a certain area, we put a physical barrier. This barrier can be suggestive (a ribbon) or a hard physical barrier (a fence).

OVNs rely on stigmergy, which in turn relies on embedded governance. In other words, in order for OVNs to scale, we believe that most of the rules need to be already embedded in the design of the OVN's digital space and in its methods and processes.

Onchain and offchain governance

Onchain governance refers to smart contracts, which are self-enforcing programmable rules, i.e. programs that are implemented on blockchain-based infrastructures to execute with certainty whenever certain conditions are met. A bundle of such smart contracts form a Distributed Autonomous Organization (DAO) or Distributed Autonomous Corporation (DAC). Offchain governance refers to the residual rules and decision making process that are not automated in such way and rely on human action.

There is a raging debate about DAOs and onchain/offchain governance, about how much automation we can have, how much governance can be onchain and if there is a necessary requirement for offchain governance for an organization to exist.

Governance components

Registries

Registries are lists of important elements used in governance. For example, the registry of affiliates is a list that contains all current affiliates of the OVN. Other governance modules can use this list, for example when it is time to make a decision, only those included in the registry of affiliates will be considered for participating.

Often used registries

  • List of affiliates
  • List of events (pas and future) - important to verify that the event baring the OVN's name is sanctioned by OVN affiliates.
  • List of legitimate funding proposals - important to avoid random people sending funding proposals in the name of the OVN.
  • List of projects - important to verify if s project is truly developed within the OVN.
  • List of digital services used by the ONV - important is one needs to know if an online service or application truly belongs to the OVN

Decision making tools

...

Body of agreements

Can be a body of smart contracts, paper contracts and a mix of both (See the Embedded and non-embedded governance section).


Tibi's view on governance

by Tibi

Rules and norms are solutions to a specific category of organizational problems. Organizations develop different types of problems as they grow and as they undertake more complex endeavors. Some of these problems are of governance-type. Setting up new rules must respond to an organizational problem [use a problem - solution pattern to propose and design new rules].

Every organization has its own specificity and transposing governance from one organization to another one is not so straightforward, especially without considering established methodologies and infrastructure.

Governance must be developed in parallel with infrastructure (tool, seen as technological solutions to a specific category of organizational problems), methodologies (processes seen as solutions to a specific category of organizational problems).

Fluid p2p governance

A new type of Governance system proposed by Tibi. Open document.

Work in progress

Sensorica is working on OVNi 3.0 Governance, an improved version of Sensorica's governance, compatible with a p2p IT infrastructure. open working document.

Tools

Deontic Ontology

Fundamental concepts and relations that allows us to speak about decisions, rules, norms, obligation and premission, ...

      • ToDo***: We need to integrate the REA ontology used for modeling economic processes.
  • Agents (individuals or organisations)
    • Individuals
    • Network
    • CELL (or Node)
    • Custodian
    • Exchange Firm
    • Consortium
    • Partner (organisation of individual)

Operators: Obligation, Permission We can derive Access (to benefits or resources) from Permission?

  • Resource:
    • Physical: materials, tools, equipment,
    • Virtual

Deontic logic

A type of logic if the field of philosophical logic that is concerned with obligation, permission, and related concepts. Alternatively, a deontic logic is a formal system that attempts to capture the essential logical features of these concepts. It is useful to formalize governance and embed it into processes, automate governance (see Enbedded Governance and Onchain governance sections above). More on Wikipedia. See also This paper.


See also

External links