1. Introduction
“It is mostly in periods of turmoil and strife and confusion that people care much about history;” ([
1], p. 45). The same can be argued with the study of social sciences and, especially, economics. Even more, the growing interest, both in popular and scholarly discourse, of alternative economic and business forms indicates we are indeed in such a time.
Open innovation has sprung out of an expanding universe of practices and ideas around the sharing of knowledge and ideas largely effectuated by Information and Communication Technologies. The general logic is one of problem solving, exploiting a hitherto unseen capacity for large-scale engagement and coordination of diverse contributors. As a phenomenon, open innovation relates to a broad spectrum of practices, ranging from centrally planned and controlled processes like crowdsourcing [
2] and online labor markets, to more open and bottom up ones, such as commons-based peer production (CBPP) [
3]. Many different strategies can be identified for how the human resources, capital, and degree of uncertainty are defined [
4]. Yet, the underlying dynamic remains the same: a generic capacity to employ knowledge in dynamic and uncertain processes. This capacity is gradually affecting the way firms approach innovative activities, reshape their business models and, potentially, their very nature.
In the innovation literature open innovation is mostly approached as a strategic option for firms to employ external inputs [
5,
6,
7]. On the one hand, a wide array of options unfolds, for both firms and users, but on the other hand, the scope of this interaction remains limited. More radical models concentrate on the virtues of CBPP, and develop structures and organizational patterns that better enable and support it. CBPP shifts the locus of innovation and production outside the boundaries of either firms or networks and postulates an alternative view of value creation altogether.
Blockchain technology, which arose itself as a CBPP project, has evolved to attract even wider attention. From the CBPP perspective, blockchains have been envisioned to support and stabilize its value model, rationalizing openness and sharing in economic affairs. However, many different groups with diverging political values are looking to deploy the functionalities of distributed ledger technologies (DLTs) and heavily influence the relevant iterations and technological outcomes. Simultaneously, the blockchains are yet to establish a viable dominant design. Still, DLTs have challenged the core assumptions of the financial and monetary system, opening up a discussion where these matters become relevant for an increasing fraction of society. Now, an ontological shift is necessary to break the chains of open innovation through CBPP. Post-blockchain encapsulates such a vision of a blockchain-informed transition that is not necessarily blockchain-driven.
The aim of this paper is to explore these emerging relationships between open innovation and CBPP through a case study. Using an alternative view of open innovation as a starting point, I will explore the inner dynamics of CBPP insofar as they enable and support sustainable and responsible innovative activities. To this end, I will examine the case of Sensorica, an open enterprise based in Montreal, Canada, producing open hardware sensor technologies. Sensorica is an emblematic case of open innovation through commons-based organization. Its diverse community has devised unique solutions to coordinate productive resources, employ the necessary knowledge and skills, and successfully interface with the market. In addition, Sensorica has developed a pioneer accounting system to track, assess, and distribute value that offers useful insights on how to capture value from open innovation.
The case study of Sensorica, being part of an emerging phenomenon such as CBPP, posits several challenges as a research project. First, the data gathered are very “thick” in the sense that they carry along many elements from the context and environment in which they are embedded. Therefore, it is often difficult to distinguish the research subject from the broader phenomenon, and vice versa. Second, as an organization it has undergone, and is still undergoing, several transformations. Since the beginning of this research, some of the observed elements and relationships, being themselves defined in a dynamic fashion, have also evolved, along with a rapidly changing environment. Likewise, the descriptions of the various components comprising its technological infrastructure are at different stages of functionality and use in different times. Hence, the analysis mostly reflects the technical feasibility and deployment of these features, even though their real-world use may differ. Therefore, it should be clarified that the case is not presented as a fully functional automated system or a crystalized organizational model, while its eventual form and very success need to be tested through time. Nevertheless, the story of Sensorica, as it is unveiled through its extensive documentation, online presence, and experiences of the different people involved, remains highly relevant and has important lessons for organizational design based on open and distributed technological infrastructures.
In the following sections, a brief background is provided on open innovation and blockchain technology, followed by a review of the resources–events–agents (REA) accounting model that underpins the Sensorica infrastructure. Afterwards, I present the methods of the case study and the case of Sensorica, which follows the formulation of a narrative based on interviews with key persons, along with data retrieved from their rich and freely accessible documentation. Finally, I will discuss the main outtakes and draw some conclusions.
3. Materials and Methods
This paper was based on a case study, to gather and analyze diverse empirical data provided by the examination of an individual case and thus reflect on a broader phenomenon [
48]. The value of the case is intrinsic, in that it is, “in all its particularity and ordinariness” of great interest in the way it reveals its story [
49] (p. 237). Nevertheless, the case selection was purposive [
50], as it illustrated an organization specifically designed for CBPP, which has successfully introduced innovations in the market.
Acknowledging the importance of diverse research techniques in case study research [
48], a combination of multiple sources of data gathering was used, including interviews, as well as internal sources of documentation and a variety of online tools typically utilized by the Sensorica community, which provided further data for triangulation [
51].
As, by definition, Sensorica avoids rigid hierarchical structures, the individuals targeted for the interviews should be considered key informants rather than gatekeepers. Sensorica has been highly influenced by the principles of peer governance [
52] and have adopted a bottom-up decision-making system based on consensus, mutual validation, and meritocracy.
The interviews were semi-structured and emphasis was placed on providing flexibility for the interviewees to discuss what they deemed most important. The goal was to establish a dialog with the interviewees, in the form of a “guided conversation” [
48] (p. 236) to reach a common understanding of the issues explored. The interviews were structured around certain base questions and probes that attempted to elicit data regarding their goals, desires, and ideologies, as well as their coordination and development methods. In total, three interviews were conducted using a video call tool due to large geographic dispersion of the interviewees and time limitations. The interviewees were anonymized to avoid potential impacts from the exposure of their views.
Lastly, data were gathered from Sensorica internal documentation (reports, agreements, working documents, etc.), as well as from an overview of the accounting system for specific projects, which is openly accessible in most parts. Data from online platforms, fora, discussion sections, and documentation (audio-visual material, reports, articles, blog posts) available were also studied, as well as email communications with individuals. Given the fact that openness is a principle permeating such initiatives, there are rich and diverse sources available for the mining of research data. Like the interviews, key documents and discussions were selected that provided the most insight in each sub-case, shedding light on the intricacies of the technology development, as well as the participants’ incentives.
4. The Case of Sensorica
4.2. Organization: The Open Value Network
The OVN is characterized by three fundamental principles: open membership, transparency, and variety of contributions [
55]. Open membership means that members can freely join or leave the network and form, join, or acquire enterprise entities. Also, members can be individuals of diverse backgrounds or organizations, including non-profits, government entities, enterprises, or even other OVNs. Transparency enables the open-source communities to gain access to information, knowledge, and processes, with certain restrictions regarding specific types of resources that may need to be handled exclusively by special expertise (e.g., dangerous chemicals may be restricted to chemists). Finally, a broad spectrum of contributions can take place, including material (e.g., resources, tools, consumables) and immaterial inputs (e.g., time, effort, information) or capital (e.g., financial investments, space, equipment, infrastructure).
The aspiration of the OVN model is to create a viable structure that harnesses the advantages of open collaboration and sharing, while it addresses the challenges of open-source projects related to governance and sustainability. Its economic dynamics are based on large scale collaboration and on customized production to create economies of scope. The OVN takes advantage of the diversity of inputs and shared resources to create innovative solutions and effectively reduce time-to-market for innovations. Through diversity and variety, a unique potential is created and exploited by the linked business entities in an attempt to become competitive in the market. At the same time, the OVN model provides solutions for open-source projects, so that they can effectively capture, manage, and distribute financial rewards to the contributors; deals with issues related to trust; retains and protects a formal legal structure and brand; and formulates and executes a business strategy.
To achieve this, the Sensorica OVN rests on a techno-social infrastructure that reinforces decentralized organization and renders the network efficient and sustainable. It utilizes the REA model to coordinate diverse agents, either individuals or business entities, in a flexible manner, considering their legal and ownership arrangements. It also performs all the traditional business functions, including Research and Development, coordination, production, distribution, marketing, sales, distribution of revenue, and legal liability. Simultaneously, it keeps track of the different contributions in a transparent network-based system, which allows the created value to be fairly distributed within and beyond the network.
The Canadian Academy for the Knowledge Economy (CAKE) is a nonprofit organization that all the agents of the network are affiliated with. As a caretaker of the network’s assets, it manages the shared pool of the network’s resources in such a way that large-scale collaboration is fostered without compromising the fair distribution of value [
55,
56]. Towards this goal, a “non-dominium” agreement is used that excludes the domination of an agent over the shared system.
4.3. Technological Infrastructure: Contributory Accounting and Network Resource Planning
The OVN infrastructure comprises three main interlocking systems [
57]: (a) a Contribution Accounting System (CAS) (in previous versions, Sensorica’s accounting system was referred to as Value Accounting System (VAS)), which records and evaluates every member’s input and calculates revenue in proportion to each contribution; (b) a reputation system, which determines the behavior within the community and attributes merit in accordance with the collective interest; and (c) a role system, which allocates the arrangement and interrelation of the different activities among the agents, based on their skills and interests. The reputation system fulfils an important function to regulate value creation and the flow in the network by filtering participants for the tasks to be undertaken.
Specifically, reputation is linked with the voluntary commitments that people make for the work that needs to be done in the network. These commitments may be connected to one or more deliverables, which in turn are required by other processes. Reputation is gained when someone fulfills their commitment, and is reflected in the subsequent processes and the people involved. At the time of writing, the system keeps track of the different types of work conducted (e.g., electronics, 3D design, prototyping) and generates an accumulated score based on the hours worked by each person [
58]. Likewise, an additional function is sought to be integrated to also include the quality of the work completed.
Respectively, roles weigh the significance of a certain task with regards to the distribution of value in a certain project. For every project a value equation is created that is decided among the participants. The various tasks to be performed are weighed according to their contribution to the project. For instance, in a certain project, one hour of engineering work can be equated to two hours of manufacturing. Similarly, the participants in one project may prefer an egalitarian value arrangement or a more meritocratic one [
59].
The aforementioned systems enable the OVN to track and evaluate the contributions, as well as redistribute revenue produced in the market. The Sensorica CAS is a contribution-based reward system, which proportionally redistributes revenues to the related projects based on each contribution. The logged contributions are evaluated through a metrics system, while participatory evaluations by the members can also be an option [
60]. The aggregated data generated by the CAS are fed into the other two systems, which in turn support the CAS. This way, the system generates a permanent quantitative and qualitative record of all contributions, in terms of who is doing what (role), how well (reputation), and how much (value) in a particular project.
The different dimensions of value are made commensurable using a value equation system, which attributes a percentage of the total revenue to every participant, in the form of “fluid equity” [
61]. The fluid equity of every contributor in a certain project is visually represented in the form of a pie-chart, illustrating its share of the potential revenue related to the project. That is, if exchange value is created in the market, the CAS guides the redistribution of the revenue to the contributors.
Given that the OVN is a dynamic structure, certain types of contributions are simultaneously associated with the creation of new resources [
62]. For example, a design or a prototype which has been contributed to one project represents a resource that can be used in a different context. To facilitate the interoperability of the resources in different projects, the CAS is complemented by a Network Resource Planning (NRP) (in other sources, NRP is also referred to as “Network Requirements Planning”) system that matches resources with certain value streams.
The NRP is an Enterprise Resource Planning (ERP) type of software based on the REA model to support the complexity of operations in an OVN. It collects, stores, and interprets data from all the different types of activities in the network and connects them to specific resources, events, and agents to keep track of the contributed value on resource level.
In NRP, everything is connected together. Economic agents are associated with other agents and participate in events of various types, such as processes, exchanges, or transfers. Events change the state of resources by using, citing, consuming, creating, or transferring them. A certain resource may be an output from one event and then an input to another one. Those events are then again connected with a resource flow.
More specifically, the REA model operates in three levels in the NRP (see
Figure 2) [
63,
64]. The first level concerns the definition of “types” (or recipes). These define resources, processes, agents, or events associated with productive activities in the network. The second level refers to “plans”, which entail different forms of commitments for scheduled activities, including productive processes, orders, transactions, or purchases. Finally, the level of “events” (or actuals) contains all the different economic occurrences that effectuate changes in the quantity or ownership of resources, performed by the participating agents. Each event has a respective definition on the type level and entails different commitments on the plan level. Different processes connect the events level with the plan level, as they contain inputs and outputs related to either commitments or economic events. Projects define the context where different things or processes are involved in one of the three levels.
The NRP integrates the function of the CAS in Sensorica, by allowing the re-use of resources in different contexts. This is especially relevant in the case of CBPP, which relies on the circulation of digital commons, which are abundant and can thus be utilized simultaneously in many different contexts. In turn, further utilization of the associated resources results in further increase in the aggregated use value for the network. The NRP-CAS thus enables the advantages of network effects, while effectively supporting the complex underlying relations.
At the same time, the NRP-CAS supports the expansion of the OVN, as it may attribute equity to resources generated by external sources and integrate them into the network [
52]. For example, a piece of open-source software code, which has been developed by non-members of Sensorica, can be used within a Sensorica project to compile a final product that is then exchanged in the market. The external developer is given a percentage of fluid equity in the project and a proportional distribution of any revenue. This way, the OVN can connect creative communities in mutually beneficial terms with the NRP-CAS providing the common language.
4.4. Projects and Operation
In Sensorica, government grants or market operations generate income. The NRP-CAS enables revenue to flow back to its contributors based on the quality of each contribution. The latter is evaluated via peer review techniques and self-logging, eliminating rent-seeking behaviors and reciprocating benefits to network through common value creation. Thus, a sense of fairness permeates Sencorica’s techno-social infrastructure, which, in turn, supports its network’s contributions and operations.
Regarding the initiation of Sensorica’s projects, the related processes can take place either internally or externally. Ad hoc projects can emerge through discussions set off by the network participants. By engaging more people in the network, the planning and research process takes place, followed by the arrangement of the NRP-CAS. The development of the project is thus fostered, including contribution records of the participants, marketing, and accounting processes.
There are typically nine steps to initiate an endogenous project in Sensorica [
65]:
Project idea: People begin broadcasting an informal proposal in the Sensorica forum or through other media. The rationale and main idea are discussed and explored;
Creating an official project: After a round of informal discussion, a formal procedure to create a project is followed, based as set of shared instructions [
66], methods, and templates provided [
67];
Building capacity and communication strategy: The project participants agree on the procedures for project execution and the appropriate communication channels and coordination tools;
Establishing project structure: A minimum working structure is developed, comprising, at least, the description of the project’s (a) governance, including the rules of conduct, conflict management, and distribution of rewards; (b) roadmap, including important milestones and plans; and (c) custodian agreement, signed by the custodian to administer the relevant funds;
Creation of a core team: After the conditions for communication and structure have been agreed upon, a core team of instigators is formed and they reach out to the network to map interest, gather feedback, and create incentives for participation;
Establishing incentive structure: A structure is developed to motivate potential contributors, including a market plan and a plan of the necessary resources, including skills, equipment, materials, and financial resources;
Expanding the team: Once the incentive structure is set, a process of outreach, onboarding and engagement, and information mining begins to attract the necessary talent and resources;
Planning activities: The activities needed for the project implementation are systematized and formalized in the NRP-CAS using “workflow recipes” [
68], i.e., a set of pre-defined descriptions for a series of processes and distributions of tasks;
Documentation: All activities in Sensorica are followed by extensive documentation in the project website, as well as in a main shared document, which functions as an index for various working documents concerning major components.
For example, the “Mosquito” technology, a force-displacement sensor, exemplifies how a project can start internally in Sensorica. It was launched in 2012 under the coordination of 15 network participants, who undertook several roles, ranging from design and development to marketing and documentation. In 2013 the company Tactus Scientific Inc. introduced the Mosquito Scientific Instrument System into the market. Being initially tested in cardiovascular diseases, it has now expanded its use in robotics and wearables.
Similarly, Sensorica’s network can undertake innovation processes of projects that have been outsourced by external parties. For instance, the development of an Internet-of-Things solution was outsourced to Sensorica by a Montreal-based company in 2015. Following the Sensorica’s modus operandi and openness values, the company agreed to release the product under open-hardware license. In addition, it financed CAKE—the network’s custodian—to distribute revenue to the participants in the product’s development process. Based on the data available in the Sensorica NRP-CAS [
69], 686 contributions were made in various tasks, ranging from software design, electronics, and optics development to admin and documentation work, generating over 60,000.00 CAD in income for the eleven affiliates participating in the project [
70,
71].
In general, Sensorica has been able to sustain its operation for almost a decade. Based on the latest available data [
72], a rough estimate of 330,000.00 CAD has been raised since 2011 in grants and loans, while revenue from commercial activities has been ranging around an average of 50,000.00 CAD annually, from 2015 to 2018. At the time of the writing, about 30 affiliates were active in Sensorica, who, between 2016 and 2017, had invested an aggregate of almost 6000 h of work and more than 16,500 CAD in the infrastructure, maintenance, and development of the network [
73].
Conversely, as the distribution of rewards is based on past economic activity, the accumulated data comprise a public socio-economic profile related to a particular person or organization. There is a significant amount of power that this type of information can potentially provide if it is appropriated or centrally controlled. For this reason, as of 2015, Sensorica has been exploring the deployment of the NRP-CAS infrastructure on the blockchain, to maximize integrity and security [
74].
5. Discussion
Sensorica features some unique and admittedly impressive features to speak for a full-fledged open innovation through CBPP. Its infrastructure and organizational model is, of course, not completely conflict free, from a technical, conceptual, and a human-centric point of view. However, these do not reduce the main lessons to be learned from the case.
5.1. On the Viability of the OVN Model
To begin with, the OVN model, as demonstrated by Sensorica, carries some decisive solutions for commons-oriented projects. The unique modality of production effectuated by CBPP communities can connect with the market and the public sector by translating, rather than transforming, the value of the commons in iterative transactions. Financial or other types of rewards can be captured, managed, and distributed to contributors, in a way that is decided among them. Simultaneously, trust-related issues are dealt with functionally and systematically, while the network is able to retain community-based values, along a formal legal structure, a marketable brand, and coherent business strategy.
Sensorica is, quoting one of the interviewees, “a peer-to-peer network for innovation and production, the same as Bitcoin is a peer-to-peer network for providing a service of exchange”. The OVN model fundamentally provides a protocol that allows the functional reality of a firm to be transposed to a peer-to-peer network. People contribute to the economic activity because they trust the protocol and that they will be rewarded in the end. This opens up a field of experimentation for different ways that people evaluate contributions and distribute benefits. They can try different incentive and evaluation systems to coordinate a variety of contributions and distribute different types of benefits, be it financial rewards, visibility, reputation, learning, or access to governance.
Market signals still serve to attract participation. People engage in a project because they intuitively believe there is a market for it, but that is less imperative compared to conventional firms. They may also participate for the social or ecological concerns of a project or the opportunity to learn new skills. More importantly, they have agency with where the project goes, as people appoint themselves to one or more roles. “[…] if anyone comes and solves a problem, delivers a task you cannot refuse it. And that person can be anyone in the world”, mentioned one of the interviewees. Hence, there are two dimensions of openness that Sensorica demonstrates: one is access to information, knowledge, and processes, and the other is access to participation. As another interviewee put it, it “is just the basic transparency. […] People can see everything, so I think that’s what’s helpful with coordination.”
However, this openness and transparency often also comes at a cost. Open systems can sometimes create disaccord and can obfuscate relationships with third parties, especially when it comes to external clients. This, of course, goes both ways. The community might be intrinsically motivated to further explore and experiment, but when market-driven clients are involved this is not always the way they want to go. Additionally, this can also affect investment, as, besides all the challenges common to open-source business models, Sensorica also needs to effectively communicate its modus operandi. As one interviewee eloquently presented it, “you can put it under one roof, but the job security is not there. […] It’s hard to fuse money and protect the community at the same time.” Sensorica tries to operate within an existing system that is largely not compatible. The structure may be in place but there is still a big gap to be bridged.
5.2. Breaking the Chains: From Chains to Ecosystems
Overall, Sensorica contributes to a more inclusive discussion on open innovation. Capturing value from innovations has long been a central topic for the relevant disciplines, to which the concept of open innovation has hitherto contributed insignificantly. Cases like Sensorica demonstrate how openness may be an intrinsic and functional, rather than strategic, option. The focus is placed on agency and stake, instead of structure and control. There is of course structure; someone still needs to make sure all the necessary roles in a project are fulfilled and that the project delivers. Products need to be introduced in the market and there is ongoing debate of what is valuable and how funds are distributed. However, there is at least the discussion taking place and openness allows people to contribute to it. “There are templates that emerge but we don’t claim to have the recipe and I don’t think there is one recipe,” mentioned one of the interviewees.
Furthermore, the NRP project has itself evolved through and with Sensorica. Some of the main instigators of the Sensorica infrastructure admit they are happy to see their work being taken over by other groups of people, which are now also coming together: “It’s all coming out of the NRP project but it’s not really the NRP project anymore.” At the time of the interviews, new iterations of the NRP project were initiated in collaboration with the Freedom Coop (
https://ocp.freedomcoop.eu/freedom-coop) in Europe and The Mutual Aid Network (
https://www.mutualaidnetwork.org) in Madison, Wisconsin, among other communities around the world. The next challenge is to make all of the different systems interoperable. As it was righteously put by one interviewee, “because when the software can talk to each other, then the groups will be able to interoperate with each other. They will be able to exchange with each other, but more importantly they will be able to create supply chains and, better yet, networks of ecosystems.”
This vision is particularly relevant to the blockchain domain. The code may be open but communities gathered around a certain cryptocurrency or protocol can easily get locked in. So, from an infrastructure viewpoint, a common vocabulary among different systems is crucial. Organizations, firms, or communities can be free to use their preferred software and infrastructure, but systems need to be interoperable. Much like double-entry bookkeeping provided a common vocabulary for market exchanges, new forms of accounting can help diverse agents interface with each other. However, this time there would also be diverse motives driving interaction, other than prices and account bottom-lines, allowing more pluralistic relationships to emerge.
For instance, the NRP iteration of Freedom Coop, called the Open Collaborative Platform (OCP), is an organizational tool for network-based organizations. It started as a platform that helped the Freedom Coop members coordinate and describe, organize, and evaluate the network’s projects and the collaborative work conducted. The OCP has built on several features of the NRP to expand and incorporate other projects and functions of the network, including the Bank of the Commons, serving as an alternative banking tool supported by the network’s cryptocurrency, FairCoin [
36,
75].
The next steps would be for these emerging forms of organization to build common vocabularies and protocols to convert and distribute data across different networks, tools, and applications. In the case of the Freedom Coop, the creation of an Open Cooperative Ecosystem [
76] is aimed at fulfilling this vision. Moreover, the ValueFlows project is dedicated to the development of a common vocabulary emerging from the various mutual-coordination networks based on the REA ontology [
77]. ValueFlows begins with the definition of the required components that would work across different apps and agents and can be run on different decentralized protocols and frameworks, including Holochain, ActivityPub (
https://www.w3.org/TR/activitypub), and Secure Scuttlebutt (
https://scuttlebutt.nz).