Content:
I. Corporate Hierarchies
II. Firms Cost Boundaries
III. Incentive Mechanism
IV. Model Start Up
I. Corporate Hierarchies
Companies today remain hierarchies, and most activities occur within corporate boundaries. Corporate boards still compensate executives and CEOs far beyond any reasonable measure of the value they create. Not incidentally, the industrial complex continues to generate wealth, but not prosperity. In fact, there is a strong evidence of a growing concentration of power and wealth in conglomerates and even monopolies
over the last few decades, hierarchies have come under scrutiny as structures for killing creativity, undermining initiative, dis-empowering social capital, and scapegoating responsibility through opacity.
As a result, many management hierarchies have become unproductive bureaucracies. first we need to identify, the aspects of firms cost infrastructure, to determine the strategy is aligned with the nature of the business (Private Equity, Venture Capital, Investment fund, and so on)
II. Firm's Cost boundaries:
1. Cost of search – finding all the right information, people, resources to create something
- How do we find new talent and new customers?
- How do we find the people and information we need?
- How do we determine if their services and capabilities are best for us?
2. Coordination Costs – getting all these people to work together efficiently
- How should we all work together?
- How do you manage them?
Two significant coordination systems:
- Price system for decentralized resource allocation needs
- Opportunities (the market)
3. Contracting Costs – negotiating the costs for labor and materials for every activity in production, keeping trade secrets, and policing, and enforcing these agreements
- What do we agree to do, anyway?
- How do we come to terms with other parties or enter into an agreement?
- Oral agreements proved easily manipulated or misremembered and eye-witnesses were unreliable.
- Entities are nothing more than a collection of contracts ad relationships
4. Costs of (Re)Building Trust
- Why should we trust one another?
- What if parties didn’t have to trust one another, but could still act with honesty, accountability, consideration, and transparency?
III. Incentive Mechanism
The most common extrinsic motivator managers use is money, which doesn’t necessarily stop people from being creative. But in many situations, it doesn’t help either, especially when it leads people to feel that they are being bribed or controlled. More important, money by itself doesn’t make employees passionate about their jobs. A cash reward can’t magically prompt people to find their work interesting if in their hearts they feel it is dull.
But passion and interest—a person’s internal desire to do something—are what intrinsic motivation is all about
When it comes to granting freedom, the key to creativity is giving people autonomy concerning the means
Read: https://hbr.org/1998/09/how-to-kill-creativity
IV. Model Start Up:
One of the first Ethereum software development companies. Not so much about its ambitious blockchain based products and services. its about the efforts to cultivate a company of its own, a collaborative rather than hierarchical process for defining and aligning the work to be done.
Website: https://new.consensys.net/
Joseph Lubin, Co-Founder of Consensys
Firms Philosophy and Structure:
- Dynamic roles rather than traditional job descriptions
- a "hub", rather than a hierarchy
- Distributed, not delegated authority
- Transparent rules rather than office politics
- Rapid reiterations rather than bid reorganizations
- The greater the engagement, the greater the prosperity
Ongoing Projects:
- Triple-Entry accounting system
- Decentralized version of Reddit
- Document formation and management system for self-enforcing contracts
- Predictions Market for Business, sports, and entertainment
- an open energy market
- a distributed music model to compete with Apple and Spotify