Frank Hecker

Mary Colvig mentioned this on the Monday Mozilla call, and I wanted to follow up with more information. Briefly, the Mozilla Foundation is one of the sponsors of the Personal Democracy Forum conference to be held June 29-30 in New York City. To quote from the conference blurb:

… more than 1,000 top opinion makers, political practitioners, technologists and journalists will come together to network, exchange ideas, and explore how technology and the Internet are changing politics, democracy, and society.

As part of our PdF conference sponsorship we get a table in the exhibit area and some passes for Mozilla folks to attend the conference. If you’re interested in the intersection of the open web and government and politics and live in the NYC area (or can get there on your own), then I invite you to help staff the Mozilla table at this event. Your assignment: talk to the conference attendees about the mission and values of the Mozilla project (choice and innovation, the open web, the participatory Internet, etc.) and great Mozilla products like Firefox 3.5 and Thunderbird 3. Your reward: a chance to hear some of the best speakers around talk about how politics and government are being changed by the web and the Internet, and participate in the discussion yourself.

I attended this conference last year, and it was a great experience. If you’re willing to commit to help us at the conference, please contact me (hecker -at- mozillafoundation -dot- org) directly before 12 noon EDT on Friday, June 12. (I have a deadline to turn in the names of our attendees.) Note that if I get more volunteers than passes then I’ll make a selection based on people’s past contributions to Mozilla combined with some sort of random lottery if necessary.

Mark Surman has published another blog post about why hybrid organizations matter. I agree with pretty much all of what Mark wrote, and don’t have much to add in general. However I did want to comment specifically on the issue of hybrid organizations staying true to their public benefit mission, where Mark writes:

This is actually a huge challenge for both traditional non-profits (grantmaker demands trigger mission drift) and social enterprises (can become more about the market than the mission). And it’s somewhere I think hybrids built on the idea of mass participation and peer production have a special advantage. They not only have boards and leaders committed to the mission, but they also have huge communities actively involved in interpreting the mission every day by helping to make something. The aggregate decisions of people who contribute to Firefox, or Wikipedia, or Kiva help shape what these things are in very real ways, which is in turn likely to make sure things stay more or less on mission. This isn’t to say peer production is democracy. Usually, meritocracy is the rule. Still, having a massive number of stakeholders involved in building things helps hybrid orgs stay public benefit focused.

I agree with this as far as it goes, but want to expand on this point: There’s a difference between staying focused on a public benefit mission in general, and deciding exactly how an organization might best pursue that mission. I think the general form of hybrid organizations (in particular being rooted in a participatory community) helps ensure that they don’t get sidetracked by a single-minded focus on profitability or irrelevant agendas of major donors. However being a hybrid organization means still being subject to constraints based on the time, attention, and values of the organization’s leaders and the members of the associated community, and there’s still the possibility that such an organization will perform suboptimally, i.e., that in pursuing one strategy it will fail to pursue others that might be of greater public benefit.

For example, within the Mozilla community there’s an ongoing tension between pursuing the Mozilla mission primarily through developing and promoting Firefox and Thunderbird, as opposed to pursuing alternative strategies such as promoting an ecosystem of Mozilla-based applications. To take another example, some people have criticized Wikipedia contributors for working on allegedly trivial articles documenting pop culture ephemera. One can imagine alternative strategies for Wikipedia that might arguably be of greater public benefit, such as concentrating on creating serious content specifically for educational use. Can we ensure that hybrid organizations do not just pursue a public benefit missions, but do so in an optimal way? My response to that question is as follows:

First, we can dispute the use of the term optimal in this context: Who decides what the public benefit means, and whether one strategy is of greater benefit than another? Every Wikipedia article is arguably of benefit to someone, if only the person who created it, and even supposedly trivial articles can be useful to those who find their subjects of interest. The open and massively parallel nature of Wikipedia (anyone can contribute, and articles can be independently created and maintained) means that in aggregate the benefit provided by it can and will accrue to very large numbers of people. With a few thousand people in the world for every Wikipedia article there will likely be enough cognitive surplus to make Wikipedia provide a public benefit even using relatively rigorous criteria.

There are other hybrid organizations (like Mozilla) where the nature of the projects (e.g., building a browser) forces the work to be more hierarchically structured, with a relatively few individuals on the critical path to getting things done. Here I think hybrid organizations will face the same general problems as other organizations in terms of allocating resources, including dealing with the innovator’s dilemma. The problem is compounded because in non-market environments we have less clear guides to evaluating the relative returns on alternative investments. For example, would it be of greater public benefit to increase Firefox market share by 1%, or to foster the development of one new Mozilla-based application? It’s a difficult question to answer, especially a priori.

In this absence of information as to the relative merits of alternative strategies, it’s likely that even a hybrid organization would tend to favor existing strategies in support of existing goals, even in cases where a change of strategies might ultimately be of greater public benefit, because investing in existing strategies has more immediate returns in terms of the criteria by which the organization measures itself. Can a hybrid organization do better than a traditional organization (whether nonprofit or for-profit) in exploiting new opportunities?

I think the answer is potentially yes, for two reasons. First, the focus on a public benefit mission allows for (though it does not guarantee) experimental investment in new strategies without worrying overmuch about the potential economic return. Thus, a hybrid organization might invest in deliberate experiments to explore new products and services or new mission areas, including spinning off new organizations where appropriate.

Second, to the extent that hybrid organizations practice openness both in their products and processes, they help make it easier for other organizations (be they explicitly non-profit or for-profit) to explore alternative strategies in the same or related areas, with potentially greater public benefit as a result. Those organizations that succeed in their missions and achieve long-term sustainability will lead to further increases in the base of technologies, processes, and communities on which hybrid organizations can build, and the cycle can repeat again.

In essence the practices of hybrid organizations can increase the evolvability of organizations dedicated to the public benefit, pioneering new ways to adapt to the changed economic, social, and technological environment of the 21st century, and to address the challenges that face us.

Mark Surman just posted on the topic of hybrid organizations, which he defines as organizations characterized by a mix of social mission, disruptive market strategies and web-like scale and collaboration. However Mark doesn’t really explain what’s truly disruptive about the strategies of hybrid organizations, stating simply that such organizations use products, services and consumer choice to promote the ideas and move the issues that they believe in.

While Mark is using the phrase disruptive strategy somewhat vaguely, I think using it more precisely would have strengthened his argument. Disruptive strategies (or, alternately, disruptive innovations) in the sense used by Clayton Christensen and others involve providing goods or services at significantly lower cost to existing users and/or enabling new sets of uses or users for those good and services, and doing so in an economically sustainable way. Thus, for example, although a traditional nonprofit hospital may be a social enterprise by strict definition, in practice its business model and cost structure are typically similar to those of traditional for-profit hospitals. A traditional free clinic may provide a service at significantly lower cost to its patients, but its operations are not economically sustainable in the absence of subsidies; its strategy is thus not truly disruptive.

To take a contrary example, microfinance in general is disruptive because it reaches new groups of customers who were not previously reached by traditional bank lending; it is thus an example of new market disruption (to use Christensen’s term). In the microfinance arena Kiva is in addition pursuing a disruptive strategy in the way it acquires funds to lend, implementing a decentralized mechanism to solicit funds from individuals acting as donor/lenders. Since individuals acting as lenders would be less likely to demand market rates of return on their loans (and might even be willing to make loans on an interest-free basis), in theory this could allow Kiva to offer loans at lower costs than other microfinance vendors while still being economically sustainable (low-cost disruption).

Mark then goes on to note that mixing mission and market with the scale and collaborative nature of the web is what makes hybrid organizations unique and (presumably) disruptive. Again I think this point could be further clarified and strengthened by looking through the lens of disruptive innovation theory: Operating at web scale and making use of web-based collaboration, delivery, and other mechanisms is exactly what enables hybrid organizations to implement economically sustainable disruptive low-cost and new market strategies. More specifically, the web allows hybrid organizations to pursue new and more effective ways of creating goods and services, delivering those goods and services, and funding the creation and delivery, thus enabling low-cost disruptive strategies. The web also enables new types of goods and services to be created and delivered, and expands the populations that can be served, thus enabling new market disruptive strategies.

For example, Kiva’s strategy of soliciting funds from individual lenders/donors is made possible by the web, and would likely be too expensive to pursue if Kiva had to solicit funds and communicate with lenders via traditional means (direct mail, face to face solicitation, etc.). However when it comes to delivering services Kiva still relies on on the ground field partners to oversee borrowers and collect payments. On the other hand, Mozilla leverages the web to a much greater degree, in creating its goods and services (via Internet- and web-based collaboration), delivering its goods and services (via digital downloads and web applications), and funding its operations (via search engine revenues). If one were to have a measure of hybridness in the sense Mark is using the term, Mozilla would thus arguably be a more hybrid organization than Kiva, since it leverages the web in more aspects of its operations.

I think successfully leveraging the web in this way is one of the key challenges of would-be hybrid organizations, especially in making these organizations economically sustainable — because if an organization can’t achieve economic sustainability, then its strategies can’t be truly disruptive in the long run.