Proposed alterations to the original Open Enterprise Governance Model

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GT/GMC Alterations to Open Enterprise Governance Model

The purpose of this document is to identify potential roadblocks in our adoption of the Open Enterprise Governance Model. These will be posed as obstacles and we will propose solutions to them. This is by no means a finished document; other solutions and different, constructive outlooks are welcomed and encouraged. However, we ask that you read through this entire document first before you begin adding comments. You will probably have questions or alternate ideas come up as you read; please make some notes separately, and then see if your question or idea is perhaps addressed elsewhere in the document.

Initial Credits due first:

“In addition to setting the founding values, you each look at the time you put into the company to determine initial credits due. For coming up with the idea, nurturing it, providing the use of your silk-screening equipment, designing the site and several t-shirt designs, you estimate your contribution at $20,000 (20,000 credits). Jen put in about $12,000 (12,000 credits) worth in terms of her time and effort so far, and Mike gets $8,000 (8,000 credits).”

At this stage the initial credits due (see below for auditing this value) are exceedingly in favour of the founders, although of course there have been many contributions made by others. How do we motivate people to join when most of the set-up work (and credits accrued for said work) in the first year has been done by two individuals?

The solution we propose here is creating three separate categories of work to be valued. Part of that will entail “resetting the clock” on a given date, in order to begin with a clean slate for all new work. From that date onwards (for now, we’ll call it “D-day”), all work - including pro-bono, paid and organizational ­- will be valued separately. By “valued”, we mean that – following the model - credits will be applied according to our pricing scales (still in the works) and credit-per-task scale for organizational work (see below). Note that organizational work completed prior to that date by anyone other than the founders will also be valued accordingly. To be clear, if we were to value only the work partaken from “D-day” onward but not the prior work completed by the founders and others during the set-up phase, it would be unfair to the latter group. We propose that all income be split in the following manner: [1]

  • 50% New Credits (those accrued from D-day forward)
  • 25% Legacy Credits (retroactive compensation for set-up work prior to D-day)
  • 25% Pro-bono Credits (published pro-bono translation work for our web-magazine, as well as selected/limited pro-bono projects)

The Legacy Credits will be paid down over time. In fact, we propose that we extend the pay-down period so that newly-joining members are also participating in the pay-down over time. To make this work, we propose periodically (quarterly, for example) reducing the percentage being paid towards Legacy Credits from the initial 25% down to 18%, then to 15%, to 12% and finally to 10% until those Legacy Credits are completely exhausted. At that point, the percentages will be adjusted, and all income will be divided as follows:

  • 75% New Credits
  • 25% Pro-bono Credits

This means that everyone must invest in the co-op to get financial returns. How do you invest? Through “sweat equity”: in other words, time and effort. Everyone has a chance to contribute to all three categories (New, Legacy, Pro-bono), again with the understanding that until now, much of the Legacy Credits belong to the founders (although there’s plenty of time until D-day for others to participate in startup tasks). The process of investment is how many co-ops operate, but our proposed method - the 50/25/25 split - is a slower and less exclusionary way of investing compared with an up-front cash investment or “buy-in”. This solution raises further questions:

  • What happens when new members join after Legacy credits are paid off? Isn’t that unfair to the work of those members who’ve had to divest 25% of the value they’ve created to the Legacy income stream?
  • What happens when new Language Phyles (“phyles” means other, future language-combination “branches” of GT) are created? Will they also have to pay Legacy credits? If Legacy credits are settled, will they just be able to join without an investment?

We will address these issues later in the document, as this is not applicable at this moment, but we have made some initial plans for that situation in the interest of fairness to all.

When is “D-day”, and what do we do until then?

This is the option we have developed, taking into account the number of us working, the amount of work to be done during this time, and the best way to transition.

  • Have a transition period which will end when all “start-up work” is finished. This will include arranging the ability to invoice through the CIC and receive bank-transfer payments; have the website updated and migrated into two new language-specific websites; have our value-tracking software system operational, and have a full set of governance and educational materials prepared and available on the wiki. We will also use this time to determine credit values for future tasks, as well as beginning the process of establishing Legacy Credit totals. During the transition period all paid income will be divided as follows:
    1. 75% of the total payment is retained by whomever carries out a paid job contracted via GT/GMC, broken down as:
      1. 50% (following the “new work” model to be implemented after D-day)
      2. 25% towards the member’s own pro-bono credits (thus reducing those credits on account). If any of these members has their pro-bono credits totally fulfilled by this income, this will create a deficit in her pro-bono credits, which the member would need to fulfill as soon as reasonably possible.
    2. 25% towards the fulfillment of Legacy Credits to the founders, even as that value is being calculated.

Several details must be highlighted here for clarity.

  • The Legacy Credits will likely not have been completely accounted during this transitional period, but as the founders have the clear majority of that stake, this 25% is designated to be paid to the founders from the payments received until D-day, after which the balance of Legacy Credits due to other members will have been determined.
  • The 75% of payment retained by the member(s) performing the work is a short-term solution and, as it is not as distributed (and thus, fair) as the eventual model, it’s a compromise that is balanced as best as possible by the removal of pro-bono credits on account. Once we go forward from D-day, the percentages used will be the 50/25/25 plan outlined above.
  • In addition, the founders will be less heavily involved across all work streams during the transitional (or interim) period. As a result, other members will both have the opportunity and be expected to take on more work, and earn more credits, in this time.

Work during this period will be assigned to the persons who:

  • Are suitable for the specific work
  • Have demonstrably shown commitment and results in the building of the coop
  • Have accrued a larger portion of pro-bono credits

All work done during the transition period will be accounted for and applied in the new system (once it is in place). The founders encourage newer collaborators and members to accrue as many Legacy Credits as possible, so there is more equity all around at D-day. We expect that D-day will be sometime around November-December 2014.

How do we calculate Legacy Credits?

Value matrix calculated from these combined factors:

  1. Estimated average monthly hours spent on GT startup work, averaged with a fair salary (1.500 € a month)
  2. List of achievements per member, accounting, as much as possible, for the time spent.
  3. MINUS paid work (already paid).

The above can be displayed as a timeline of events and tasks accomplished, graph or calendar style with annotations.[2]

Determining credit-value for translations (being word count based) is easy, how do we determine the value of tasks?

We can do a variety of things:

  • We can be flexible as we learn and re-calculate value after tasks have been completed during the interim period. After this period, the credit-value for the most repeated tasks and variations thereof will be set.
  • We can ask Better Means, Enspiral and Sensorica for tasks they have probably encountered.
  • We can ask freelancers that carry out similar tasks both how much they charge clients and how much they’d charge peers (or us).
  • I (Stacco) have been timing myself doing a great variety of tasks since February and I can provide data which can be averaged with an ideal “income”.
  • Remember that we don’t want to undervalue “Task-prices” in relation to translation prices because we want to motivate task-contribution and not add an “underclass” admin (organization) staff who get paid proportionately less than translators.
  • Once credit value for task has been determined (before D-day), habitual tasks and their credit value will be reflected in the wiki for easy reference. These value assignments can then be added to the relevant Trello cards.
  • Those who have hands-on experience with the specific tasks are qualified to determine task values. Those who have not yet had or taken the opportunity to do specific tasks are obviously free to offer their opinions, but without actual experience they’ll not be included in that task’s value assessment. For this reason, it would be ideal if, during the interim period, everyone could at least take a chance on performing tasks that they ordinarily might not accept, so that we have the best and most well-informed input on the valuation across the board.
  • For mutual, fair task evaluation (especially in tasks where various members are involved) we will recommend the use of Ecological Economics’ Subjective Enumeration Algorithm.

How do we determine the value (or the need for) the tasks already present in the Trello boards?

We’ve reached a point where it’s become clear that the tasks and the commitments discussed for this summer need to be handled as soon as possible before D-day, and anything not completed as we approach D-day will be discussed, broken down to more scalable tasks and, if absolutely necessary, reclassified as management work post D-day.

Given that non-income generating work (non-translation, that is, organization and pro-bono work) are assigned credits, how should we set limits on self-assigned organization/pro-bono (eliminate padding)?

The pro-bono side is easy: We set a maximum number of words published per month (excluding holidays) and keep to it. On non-translation/organization work: Start-up work has to be distinguished from ongoing management and maintenance. The start-up sweat-equity investment we make now is what will bring in work in the future, so it’s no small thing. Once the “start-up” phase has stabilized, organization work should be as streamlined and distributed as possible. We want to free up as much time as possible for paying work while keeping a proportion of pro-bono translation for the web-magazine. The exceptions will be when new members/phyles join, as members and core members will take up additional responsibilities to mentor new arrivals/phyles. These new member/phyle related tasks are fed from the new contributors/phyle value stream. To clarify: Mentors working with new members or phyles will accrue credits specifically for that work, which will be part of the newly created value streams. New members and phyles will, in effect, be supporting their mentors by sharing a portion of credits accrued in any work they partake in, until they become full members.

What happens with Donations to GT?

All individual donations will directly fulfill the pro-bono value stream. Any funding or foundation grants will be discussed and voted on a case by case basis.

What happens with the credit queue, how do we cash in?

“So how does payment work? Simple: 1 credit = 1 dollar. Rack up as many credits as you want. When a contributor or member is ready to be paid, they can move a portion or all of their unpaid credits into the payment pipeline. It’s akin to sending a client an invoice or submitting a bill for services. We will cover how money is spent in the organization very shortly. For now, let’s go over a few more payment details. When a member submits some of their credits for payment, their credit invoice goes into the payment pipeline. It is paid by a check or electronic payment out of the Open Enterprise’s bank account. If more than one member submitted a credit invoice, the members are paid in the order they submitted their payment requests (credit invoices).”

We should never operate this way, on a first come first served basis, when one person has the ability to just go in and empty all of the funds accrued for themselves. To achieve this (altering the model to avoid first-come, first-served payment requests), we have designed an equitable (and situation flexible) distribution model. With such a small group now and with our goal of taking care of ourselves jointly, we’ve come up with a plan to distribute income received across the board on a monthly basis, income permitting, bringing the bank balance down to an acceptable minimum but allowing everyone a proportional cut every time. More details on exactly how this will work can be found below, but please add your ideas here. None of the credits accrued, income received, proportional allocations and payments distributed will be a mystery to anyone, given that we are at this moment in communication with the team at Mikorizal Software to adapt the Open Accounting Model to handle this in a way that will be clear and transparent for all members.

Monthly Income Distribution System

The system will work the following way.

  1. At the end of each month we will check the balance in the GT/GMC bank account where our paid invoices are deposited.
  1. We will then determine the total credit balance for every contributor and member. Those total credits are a sum of the member’s credits in each of the 3 different value streams, that is, New, Legacy and Pro-bono.
  1. We will then determine the percentage of invested credits for each contributor and member, in relation to all other contributors and members in each of the three value streams.
  1. We will then distribute all of the funds in the account according to these percentages, leaving only whatever nominal minimal deposit is required by the bank to hold our account open.

Simplified Example

Imagine that GT/GMC has only three members, Lisa, Violetta and Roy, and it’s the end of the month.

The total amount in the shared account is 10,000 €. This will be divided among the three income streams. Thus:

  • 5,000 € - New Credits stream
  • 2,500 € - Legacy stream
  • 2,500 € - Pro-bono stream*

Next, each member’s credit balance is calculated in each of the value streams (we have software being developed to track all this). These are the results:

New Credits Stream (5,000 pending distribution)

  • Lisa holds 33.3 % of the total invested New Credits: She receives 1,666 €
  • Violetta holds 33.3 % of the total invested New Credits: She receives 1,666 €
  • Roy holds 33.3 % of the total invested New Credits: He receives 1,666 €

Note that all 3 members held exactly ⅓ of the New Credits for the month, so each receives an equal pay share.

Legacy Credits Stream (2,500 pending distribution)

  • Lisa holds 75 % of the total invested Legacy Credits: She receives 1,875 €
  • Violetta holds 12,5 % of the total invested Legacy Credits: She receives 312,5 €
  • Roy holds 12,5 % of the total invested Legacy Credits: He receives 312,5 €

Note (for variety in this example) that each member had a different number of credits in the Legacy stream, so the percentage of total credits varies for each (logically). Thus, each receives a differing pay share. The same applies in the following.

Pro-bono Credits Stream (2,500 pending distribution)

  • Lisa holds 50 % of the total invested Pro-bono Credits: She receives 1,250 €
  • Violetta holds 25 % of the total invested Pro-bono Credits: She receives 625 €
  • Roy holds 25 % of the total invested Pro-bono Credits: He receives 625 €

So, after the income is distributed:

  • Lisa will have a total of 4,791 € in her account
  • Violetta will have a total of 2,603 € in her account
  • Roy will have a total of 2,603 € in his account

Yes, we know there’s 3 euros left over, those go to the Ice cream fund! No, seriously, we’ll need to be clear about the amount we need to keep on deposit at the bank, and if there are very small amounts left over beyond that minimum, we can keep them in the account until the next month’s distribution.

What happens with income derived from previously completed GT pro-bono work? (republishing) For example, say that Al Jazeera publishes one of our Spanish to English Translations and pays us for it.

In that case we consult with the author of the original article and inform her of what Al Jazeera has paid + our own internal credit assignment for said translation [3]. They then have the opportunity to gift us back however much they wish. Whatever amount is gifted back will be directly added to the pro-bono value stream

Can anyone become a user?

2:1 “Anyone can be a user; there are no special requirements.”

First of all the name “user” does nothing for us. We suggest having a provision where people can contribute to the collective if they wish to. We are referring to individuals who have neither been surveyed nor tested. We propose to name this group “supporters” and use much of the material applied to “users” in the governance model with a number of modifications. Any credits accrued by “supporters” would be held in reserve until or unless they eventually become “contributors”. This solves the issue of paying people who handed in sub-par or machine-made translations that we then had to heavily edit. “Users” is a) just a bad name for our purposes, as we don’t have users or consumers, and b) anyone who is a translator (or copyeditor) will go through a screening process to be a contributor, and begin amassing value and reputation. Our vision of “supporters” is more like cross-platform coworkers. [4] Their roles will be valuable but their work will likely be valued outside the system if by barter or gift or some other means. The roles of supporters is as yet open and undefined in large part but, again, we think it’s better not to disturb the overall coherency of the model in case something becomes clear in the future. This way we prevent needing to go back and add to the structure what was already there to begin with. Secondarily, although it may make sense to classify very “known quantities” like tech support people as “supporters” because they aren’t likely to fully incorporate themselves into our coop, both on the working and the income distribution/sharing streams, we’re a bit stuck for exactly how to classify them. It’s possible that if we generate enough funds to simply pay their credits off outright as for services rendered/contractors, it won’t matter what we call them - except for their role as credit holders in any governance model-dictated voting privileges. The reason it may make sense to allow them specific, designated levels of voting privileges is that we could easily benefit from their input in certain matters, and they will gladly give it without feeling (we presume) constrained by having their voting power comparatively reduced. We envision a public Loomio forum and Trello board for tasks where “anyone” can help. What balance do we strike if we call ourselves an “open enterprise”? (more on this below)

Can anyone become a contributor?

Section 2:2 states: “Any user can become a Contributor; there is no expectation of commitment to the enterprise, no specific skill requirements and no selection process.”

This is obviously not the case with translation. Contributors will only be admitted into the system after completing the survey and translation test (and passing it). The question, again, is whether we just let anyone wander in and contribute to tasks or not. We can keep it small at first and survey-based, as experience has shown it wastes a lot of time when someone tries to help but hasn’t put the effort in to understand our bigger picture. We’re not a volunteer organization, we’re an income-sharing cooperative, and need to manage membership more closely.

How “Open” are we?

We need to strike a balance between open-ness and privacy. As an “Open Coop” we are expected to be transparent and accountable, at the same time we’re expected to be professional and discreet with the information of outside parties.

Not sure. A combination of:

  1. Open value accounting (published through quarterly reports, anonymizing client-member information but including financial or statistical data)
  2. Some public Trello boards, Loomio forums (for “supporters”)
  3. Semi-private (ie, post survey/for contributors and up) Loomio/Trello environments (the bulk).
  4. Private (core members only) Loomio/Trello enviroments. (Like the member application environment)

The Wiki will always be kept open. We can release some selected translation showing “in progress” work (original/translated, corrections) from time to time as “learning materials”. Boards dealing with paid work will naturally include private data such as client payment information, time sensitive original documents, i.e., materials scheduled for eventual but not immediate public release, and perhaps conversations relevant only to the parties involved. Since we’re operating as an agency, the privacy of clients should never be taken for granted. The standard that most people would expect is some protection of this kind of information. Sources for paid work should never be open and only shared with participating members and phyles.

How do we set the number of credits due for membership?

“A contributor earns enough credits. Each open enterprise can set their own mark. Thus, if the mark is 5,000 credits and a contributor earns 5,000 or more credits, they are nominated to become a member. Another member in the enterprise nominates a contributor for membership.”

We’d keep it at credits, but 2,500 is probably better, more inclusive number (we can vote on adjusting this any time if we feel it’s important for some reason). The nomination of a contributor by a member is actually dealt with after our survey/evaluation testing procedure, and after that member has achieved the entry level credits.

What happens when new members join after Legacy credits are paid off? Isn’t that unfair to the work of those members who’ve had to divest 25% of the value they’ve created to the Legacy income stream?

What happens when new Language Phyles are created? Do they pay Legacy credits? If Legacy credits are settled do they just join for free.

Copied from above: When new members/phyle join, existing members and core members will take up additional responsibilities to “mentor” new arrivals/phyles. These new member/phyle related tasks are fed from the new contributos/phyle value stream (before they become members or spin off into independent phyles.) A percentage of the income stream generated from work done by or with new members/phyles (we propose the same 25% split on top of the pro-bono 25%) for a time period of perhaps 3 months, during this time these new members and phyles will also be generating their own banks of credits.

Other options are: stipulating that a percentage from new members goes towards the costs of the collective for a certain period of time. 25% may be much but perhaps 12%, could be spent on infrastructure (a new server, say) or as a contribution to the pro-bono stream.

As we’re not at that point yet and to facilitate moving forward with this we should keep this aspect open for discussion and decision making although perhaps not immediately our highest priority. Also, with this being a likely but “in the future” occurrence, we’ll have time to make inquiries with others who have used this model, similar models and just coop membership rules in general so we’re not making decisions in a bubble. In all likelihood, given the way we’ve been approached for paying work regularly, including in other language pairs not currently handled by our existing set-up, the fact that Legacy Credits have not yet been paid off would actually work well for us, as we’d get additional contributions going toward fulfilling the pending Legacy Credits. “Future scenarios” will continue to be explored with more and different members involved.

Language Style

While the model is pretty great, some of us have had issues with the overtly start-up/corporate oriented language and metaphors it employs. For example, in certain parts of the manifesto it repeats the mantra of the OEGM being a democracy: "'Because an Open Enterprise is a democracy, what the organization does is decided by a democratic system of sharing ideas and voting upon them." Sounds good, right? But then, in the actual Governance Model, we read: "'The Open Enterprise governance model comes from the more democratic end of the spectrum of control. ''But it is not a democracy, it is a meritocracy.''"

Some of us don't appreciate this sort of language and the word "Meritocracy" can also be misinterpreted. Our decision here is to change the language to fit more with our Commons/P2P activist ethos, and employ the word Equipotentiality.

By this we mean that we are all equals and we will all be able to develop our capacities to their fullest potential. Those who contribute more of their potential to the project will be justly rewarded for doing so, but everyone will have an equal chance of contributing.


  1. IMPORTANT NOTE (2017): For simplicity's sake we decided to NOT pay founders (or anyone who contributed admin work) any Legacy credits. But to add this to their "pots" as influence/voting credits. Paying these monetarily would disencourage new users. We basically decided to gift all prior admin and set up work
  2. To clarify: Please keep in mind that this is not just about “the founders”. One of the main objectives of the interim period is to equate legacy credits and give new members the opportunity to accrue a larger proportion of these prior to D-day.
  3. On the pro-bono stream: For clarification. The pro-bono stream will be always in flux being added to by new work and paid down by new income. Within that stream, every pro-bono translation will have a value of its own, which will be in the process of being paid down. At such point as an author chooses to gift us back in whole or in part any funds generated from republishing, we will be able to tell the author what specific amount of value is still open for that particular translation.
  4. Non-translation supporters:For example, people who can help us with web-site development and other tasks