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README.md

The Gratipay Guide to Launching an Open Organization

The purpose of this book is to help you launch an open organization on Gratipay. Gratipay is itself an open organization; we provide payments and payroll services for other open organizations. We see a need in our user community for practical advice on getting an open organization off the ground, both because the concept itself is new, and also because many of us who care about openness are new to organizational leadership. The audience for this book, therefore, is the community of people who use Gratipay for payments and/or payroll in the open organizations they lead, especially those just starting out.

Remember that an open organization is still an organization—a term we'll use to mean an economic unit larger than an individual. Whether business, charity, or government, organizations take in money, and produce value in the world. Open organizations are no different in that regard, and we are subject to the same market and regulatory forces as any other organization. We have to tell a better story about a better product for a better price with better accountability in order to succeed, and therefore much of the advice that applies to any organization translates more or less directly to an open organization.

However, a lot of us aren't used to thinking of ourselves as organizational leaders. Some of you might balk at the idea—maybe it even sounds like selling out! If you're raising your hand, then part of the purpose of this book is to put you on a path to thinking about your project as an organization and you as a leader of it. Hopefully, after reading, this will sound more exciting than scary.

This book is laid out as an introduction to topics that are relevant to every organization. Each chapter provides a brief introduction to the topic with links to further resources, and includes a discussion of ways in which the topic uniquely applies to open organizations. The topics are:

  1. Identity: Defining an Organization, for Itself and for Others
  2. Communication: Handling Information Flow Across a Porous Boundary
  3. Production: Delivering on Your Value Proposition
  4. Governance: Distributing Power in Ownership and Management
  5. Financing: Fueling Growth

Before we proceed, though, let's take a moment to define what exactly we mean by the term "open organization," and (for those not already convinced) why you might want to launch one.

What Is an Open Organization? Why Are They Interesting?

Let's define what we mean when we talk about open organizations. We'll look first at a snapshot, Gratipay's definition as it currently stands. Then we'll provide some background on how we arrived at our definition. Along the way, hopefully you'll catch some of our excitement about how open organizations improve on closed organizations. Lastly, we'll discuss our definition in relation to some other definitions.

(Note: This section is especially important for Gratipay internally, because it encodes one of the two criteria we look at when reviewing applications for new organizations interested in joining Gratipay.)

Our Definition

We define an open organization as an organization with a fuzzy and permeable boundary. Let's unpack that.

Open organizations (as we've already pointed out) are a subset of organizations, which we've defined as any economic unit larger than an individual. The boundary of any organization demarcates the set of individuals who belong to the organization, and those who don't. The essential feature of open organizations is that this boundary is permeable.

A permeable boundary is one that individuals can easily traverse. In practice, organizations with a permeable boundary also end up with a fuzzy boundary: one that is not clear, not sharp or distinct or well-defined. This happens because, when given the choice, individuals select very different levels of engagement with an organization.

For Gratipay, we look at three primary characteristics to determine whether an organization is an open organization with a permeable boundary: liberal licensing, pay-what-you-want revenue, and take-what-you-want compensation. For each of these criteria, there is room for interpretation. We're fundamentally looking for an attitude of openness, of which these characteristics are a manifestation. Let's consider each in turn.

Liberal licensing means that your organization offers its products and services under permissive licenses such as those developed by Creative Commons, or those approved by the Open Source Initiative. Why? Because you want to share! P.S. We haven't sort out how this relates to services businesses yet.

Pay-what-you-want revenue means that a portion of your revenue is voluntary on the part of your customers. We said earlier that organizations in general take in money, and produce value in the world. There's a sense in which open organizations reverse the process: first we produce value in the world, and then we receive money for it. Why? Because you want to share!

Take-what-you-want compensation means the staff of the organization—its proprietors, employees, contractors, etc.—directly determine their own compensation. No-one decides anyone else's salary, whether through performance reviews or other algorithmic determinations. Why? Because sharing is great! :-)

How We Arrived at Our Definition

"The First Open Company"

"The Second Open Company"

Balanced (archive)

Open Company Initiative

Other Definitions

From http://p2pfoundation.net/Open_Organization:

An open organisation is an organisation open to anyone who agrees to abide by its purpose and principles, with complete transparency and clearly defined decision making structures, ownership patterns, and exchange mechanisms; designed, defined, and refined, by all members as part of a continual transformative process. (Source: http://uniteddiversity.com)

That one seems to date to December, 2009—almost as old as the E Text Editor announcement! Another via P2P:

An Open Organization is defined as the sharing of ideas, knowledge, resources, and skills across organizational, generational and cultural boundaries within, and in some cases outside, a flat hierarchical, agile, self-led organizational system for the purpose of achieving a stated outcome. (Source: Dr. Philip A Foster, http://www.maximumchange.com)

From The Open Organization by RedHat CEO Jim Whitehurst (p. 2):

[An open organization is] an organization that engages participative communities both inside and out[.]

No idea where this is coming from:

Organizational structure characterized by (1) Flatness: communications and interactions are horizontal, (2) Low specialization: knowledge resides wherever it is most useful, and (3) Decentralization: great deal of formal and informal participation in decision making. Organic organizations are comparatively more complex and harder to form, but are highly adaptable, flexible, and more suitable where external environment is rapidly changing and is unpredictable. Also called open organizations, they are contrasted with mechanistic organizations.

Let's Go!

Are you running an open organization on Gratipay? Please consider this your book—feedback is welcome as you read along. Thinking of launching or converting to an open organization, possibly on Gratipay? Read on, and then dive in!