How important are networks and communities in building successful markets?
Professor Elinor Ostrom is the first woman to win the Nobel prize for economic sciences. She’s been recognised for her work on “the Commons” – meaning anything that’s collectively owned, such as common land.
Before Elinor came along, conventional economic theory was that if there is a commonly-owned resource, the people who own it will always act individually in their own self-interest – and ultimately damage or destroy the whole resource, so that everybody loses. It’s a pretty sorry reflection of the human race.
She challenged this dogma. She showed that commons can in fact be managed in a way that leads to shared prosperity, if the individuals using it develop the right methods and institutions (networks) to manage it.
In recent years her work has been proven by many of you reading this. If you’ve used ‘open source’ software, you’re part of a self-policing network that allows commonly-owned assets to be used widely, rather than used up. By acting as a community rather than a set of individuals, everybody wins.
Organised sharing is typified by Creative Commons, the non-profit organisation that supports legal, mass sharing of intellectual property. It uses a responsible and open approach to copyright law that benefits both the content provider and the user – increasing the body of work and creativity that is available within “the Commons”.
As industry gradually becomes more comfortable with the practice of Open Innovation, we need new business models like this – models that can perform well, at scale, within an open environment. Elinor Ostrom’s work helps to drive the paradigm shift away from closed-only systems, and Creative Commons show us it’s possible in practice.
Are you working this way already? Are you thinking about adopting a more open business model to drive your organisation forward? Do you think it’s risky?