Tag Archives: crowdfunding

Sharing Economy, self-organizing networks, democratization of information, ‘sharing is the new owning’, cheap and quick money through Crowdfunding, more innovation through Crowdsourcing … all this is current. Cut.

In fact we find ourselves in the midst of a transition from one era to another: from modern society to network society. The tribal society started with the development of language. When writing was invented tribal society developed into ancient society. Modern (or industrialized) society developed with Gutenberg’s printing press. The change to the era of networking began with the invention and global spread of  the internet. With each transition, communication behaviour, complexity and hierarchies changed considerably. All the changes of eras were in fact driven by a major change in the availability of information and knowledge.

Usually such transitions take decades to complete. An era change always involves a shift of powers and a split in society divided by the new cultural (social and economic) techniques.

books

At the turn of eras to modern/industrial society the printing press was invented. Suddenly, everyone could own a book. Grand! Yet it was at this time also quite an advantage to be able to read in order to benefit from the blessings of this innovation. Eventually (at a much later date), compulsory school education was introduced.

At the turn of eras, at which we stand now, the new and society-changing cultural technique is the internet along with its accompanying technologies. Illusively the internet appears as if everyone could take part on an equal basis. This is somewhat deceptive as media literacy does not mean only that one is able to operate a facebook profile without difficulty for a year. Conditions could actually not be more unfair. The small bookseller against Amazon? A million users win against facebook? Oh sure. Where? When did we see this really happen?

While disruption will be necessary in order for mankind to move on there are several questions that we need to ask ourselves in this transition phase between the Industria Age and Network Society. Outdated, outdated practices may be on the verge of entering through the back door under a new name. Let’s watch out that we don’t fall back into feudal practices that may in fact backfire on the attempt to creating increasing prosperity.

The Sharing Economy: A Trojan?

The basic values of the network society are solidarity and sharing. The Sharing Economy serves a virtually social (democratic) ideal. Basically it is okay of course, that if one buys the cars which others use, then everyone contributes a fair share so the company can make a profit. But what used to be neighbourly help is now called Airbnb and is a business that confronts hotels, which sit with numerous and costly legal and technical obligations for facilities, fire protection, etc., while Airbnb hosts in most cases have no or slim regulations to adhere to. Hence the issue is creating unfair market conditions, while both are basically doing the same thing.

Crowdfunding
Does the word Crowdfunding still sound so romantic when the cost of financing that way ranges from 9 to 15 per cent? Crowdfunding at this horrendous cost is typically used by startup businesses, while large corporations acquire millions of credit funding for close to nothing. The Sharing Economy is good business for auditing and law firms. The high cost of financing hits precisely the startup businesses, which we hope will bring positive impulses to the economy. This, while the burden is distributed to their great disadvantage. The hope for positive and sustainable economic impulses from startups cannot be fulfilled well under such circumstances.

Crowdsourcing
Regarding so called CrowdSOURCING, i.e. the drawing of innovative ideas from the public, there is just one provocative question to be asked: ‘Is this new wage dumping?’ Provocatively: ‘Just fire the people in R&D – the guys out there do it for free – or one of maybe 500 wins a subscription for something or other.’

Freedom of Information / Open Data
Concerning the “Freedom of Information” movement, currently propagandized as the democratization of information, we might ask who really benefits greatly from published Open Government Data. Software and databases, which are unaffordable for individuals or SMEs, enable large corporations in the information business to track back to individual persons even from carefully anonymized data. There can be no question of democratization of information (and privacy) under such circumstances. The freedom of information act largely plays into the hands of data collecting information concerns and puts governments at risk of accidentally disclosing private details of individuals or business information of companies to their competitors.

To summarize, it looks very romantic yet isn’t. Care and a set of standards still needs to be applied in this field in order to arrive at a mature and responsible understanding of the issue.

Instability and Loss of Trust

Almost everything changes in society at the time of a change in era: work, business models, values. Typically, at the beginning of a new era a series of professions disappear or greatly shrink in relevance – significantly more than during “normal” times. Transition times between eras also typically see the emergence of more new professions than ‘normal’ times. At first, a feeling of discomfort or fear spreads in society, because the reasons for the development are not visible. So we panic – at least since the mid 1960s when an illustration of a robot representing the “Job Killer Automation” was emblazoned on the covers of mainstream media. The visible effects of such unbalanced reporting are a feeling of instability and loss of trust in management or politicians, who seem to be responsible for keeping the economy and society in a functioning and stable mode. While some jobs erode others are desperately needed: Europe reports missing 400.000 IT professionals by the end of 2014.

In transition times between eras the successful concepts that have been used so far do not produce satisfying results anymore: conditions have changed, thus concepts will have to be amended. If we haven’t communicated that change is happening and what this means, trust will erode. How to get through transition without clashes of societal groups? What would concepts compatible with network society look like?

  1. ‘Together’ is the New ‘Competition’

Until now the economy was ruled by the principle: ‘Competition is good for business.’ Network society now functions with the opposing principle: ‘Together is good for business.’ Numerous studies, in particular those by Alexander Pentland (M.I.T.) with the currently most substantial and valid data, have shown that the professions, companies and towns or regions, which are considerably more successful economically are those in which more communication and interdisciplinary knowledge sharing take place. This was found true for call centre agents as well as for stockbrokers and entire cities. The more interaction, mixing and mingling, and intercultural and interdisciplinary exchange there is, the more innovation, added value and prosperity. Cooperation is therefore the imperative of network society. Bad news for the ‘seal-the-border’ and proprietory systems fraction.

  1. Participation Culture is Not Yet a Tradition

Our current culture is deeply engrained with the conviction that ‘those up there do what they like anyway.’ Participation today still means for many to go to a gathering, to deliver a rant and to throw a paper with accusations onto the table and then to leave. At best, leaving happens without slamming the door off the hinges. An approach like this won’t enable us to make a difference though. Participation culture still isn’t a tradition. This is something society has to learn. Participation with fruitful results will not come about in response to a mailshot, but rather as described below:

  1. Legitimation Today: Participation is Mutual

Power is increasingly less often being won in elections or by being placed in a high level position in management. Legitimation is generated through participation – not only in allowing population or staff to participate in processes and problem solving but also by management or politics participating in the life of people – and addressing problems together. Why? Two reasons. Firstly, people will endorse and support what has been developed together with them, and secondly, the solutions of a larger number of people will be smarter than a solution thought out by one person alone. In today’s complex world more brains and eyes will see more eventualities and issues than one person alone. Management or government thus have to promise less and should instead offer more (mutual) participation. In this way, insecurity can be reduced, planning stability and trust can be generated – and change does not have to be imposed but can be designed together. To wrap up: we will have to conduct conversations. The projects in the public or corporate world that really generate engagement and collaboration are not the ones where we set up a database and inform participants by mailshot. It is those, in which we talk to each other with mutual interest.

Isabella Mader