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The consumer electronics company Plantronics, for example, knowing that on any given day 40% of its workforce will be working elsewhere, designed its corporate campus to only 60% capacity

Their joint enterprise, NextSpace, became their first venture into what they call “coworking,” or the creation of “shared collaborative workspaces.”

also nurtures what the authors call “managed serendipity” — ad hoc collaboration between people with diverging but complementary skills

the number of coworking spaces worldwide has shot up from 30 in 2006 to 1,130 in 2011

someone needs to keep an eye on the big picture, to “connect the dots.”

workspaces are designed on a flexible, on-demand and as-needed basis

Coonerty and Neuner found that the most productive collaborations tended to pair highly specialized experts with big-picture thinkers

they were struck by the number of entrepreneurs and freelancers working at coffee shops in the area

Business Talent Group

Clients get the specialized help they need at a cost below that of a full-time employee or traditional consulting firm, and specialists are well compensated and rewarded with flexible schedules and a greater degree of choice about which projects to take.

This has produced a new market dynamic in which the headhunter of yesteryear has been replaced by “talent brokers” who connect highly specialized talent with companies on a project-by-project basis

Matthew Mullenweg, doesn’t have much faith in traditional office buildings or corporate campuses: “I would argue that most offices are full of people not working.”

On the other hand, Mullenweg is a big believer in face-to-face collaboration and brainstorming, and flies his teams all over the globe to do so.

He also set up an informal workspace in San Francisco called the Lounge

Additionally, a 2010 Kauffman-Rand study worried that employer-based health insurance, by discouraging risk-taking, will be an ongoing drag on entrepreneurship

the problem of payroll taxes for freelancers

up to 44% of independent workers encounter difficulty getting paid fully for their work

gets hired f

Edgeryders LBG provides the corporate infrastructure to deploy it: team building, technology, outreach and engagement, invoicing, banking, whatever. This is regulated by ad-hoc agreements between project leaders and the company, because every project is different. Once a contract is signed, the company’s board of directors takes on legal responsibility for delivering on it, just as with any other corporation.

self-selection

This much openness guarantees a very high rate of idea generation – and an equally high rate of idea rejection by lack of momentum. Anything that lives through this much natural selection has to be very, very good – and clients stand to benefit from it.

You can never hire them – they would not get through your HR firewall, because your HR people don’t understand or recognize their qualifications.

many of them don’t function well in hierarchies and bureaucracy

We provide an interface for them to keep true to themselves while meeting your accountability requirements

Interestingly, however, there is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And yet, quite paradoxically, firms can be thought of as market-free zones. Within their realm, firms (like societies) allocate scarce resources (between different productive activities and processes). Nevertheless they do so by means of some non-price, more often than not hierarchical, mechanism!

they are the last remaining vestiges of pre-capitalist organisation within… capitalism

The miracle of the market, according to Hayek, was that it managed to signal to each what activity is best for herself and for society as a whole without first aggregating all the disparate and local pieces of knowledge that lived in the minds and subconscious of each consumer, each designer, each producer. How does this signalling happen? Hayek’s answer (borrowed from Smith) was devastatingly simple: through the movement of prices

The idea of spontaneous order comes from the Scottish Enlightenment, and in particular David Hume who, famously, argued against Thomas Hobbes’ assumption that, without some Leviathan ruling over us (keeping us “all in awe”), we would end up in a hideous State of Nature in which life would be “nasty, brutish and short”

Hume’s counter-argument was that, in the absence of a system of centralised command, conventions emerge that minimise conflict and organise social activities (including production) in a manner that is most conducive to the Good Life

Hayek’s argument was predicated upon the premise that knowledge is always ‘local’ and all attempts to aggregate it are bound to fail. The world, in his eyes, is too complex for its essence to be distilled in some central node; e.g. the state.

The idea here is that, through this ever-evolving process, people’s capacities, talents and ideas are given the best chance possible to develop and produce synergies that promote the Common Good. It is as if an invisible hand guides Valve’s individual members to decisions that both unleash each person’s potential and serve the company’s collective interest (which does not necessarily coincide with profit maximisation).

Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing

In contrast, Smith and Hayek concentrate their analysis on a single passion: the passion for profit-making

Hume also believed in a variety of signals, as opposed to Hayek’s exclusive reliance on price signalling

One which, instead of price signals, is based on the signals Valve employees emit to one another by selecting how to allocate their labour time, a decision that is bound up with where to wheel their tables to (i.e. whom to work with and on what)

He pointed out simply and convincingly that the cost of subcontracting a good or service, through some market, may be much larger than the cost of producing that good or service internally. He attributed this difference to transactions costs and explained that they were due to the costs of bargaining (with contractors), of enforcing incomplete contracts (whose incompleteness is due to the fact that some activities and qualities cannot be fully described in a written contract), of imperfect monitoring and asymmetrically distributed information, of keeping trade secrets… secret, etc. In short, contractual obligations can never be perfectly stipulated or enforced, especially when information is scarce and unequally distributed, and this gives rise to transaction costs which can become debilitating unless joint production takes place within the hierarchically structured firm. Optimal corporation size corresponds, in Coase’s scheme of things, to a ‘point’ where the net marginal cost of contracting out a service or good (including transaction costs) tends to zero 

As Coase et al explained in the previous section, the whole point about a corporation is that its internal organisation cannot turn on price signals (for if it could, it would not exist as a corporation but would, instead, contract out all the goods and services internally produced)

Each employee chooses (a) her partners (or team with which she wants to work) and (b) how much time she wants to devote to various competing projects. In making this decision, each Valve employee takes into account not only the attractiveness of projects and teams competing for their time but, also, the decisions of others.

Hume thought that humans are prone to all sorts of incommensurable passions (e.g. the passion for a video game, the passion for chocolate, the passion for social justice) the pursuit of which leads to many different types of conventions that, eventually, make up our jointly produced spontaneous order

Valve is, at least in one way, more radical than a traditional co-operative firm. Co-ops are companies whose ownership is shared equally among its members. Nonetheless, co-ops are usually hierarchical organisations. Democratic perhaps, but hierarchical nonetheless. Managers may be selected through some democratic or consultative process involving members but, once selected, they delegate and command their ‘underlings’ in a manner not at all dissimilar to a standard corporation. At Valve, by contrast, each person manages herself while teams operate on the basis of voluntarism, with collective activities regulated and coordinated spontaneously via the operations of the time allocation-based spontaneous order mechanism described above.

In contrast, co-ops and Valve feature peer-based systems for determining the distribution of a firm’s surplus among employees.

There is one important aspect of Valve that I did not focus on: the link between its horizontal management structure and its ‘vertical’ ownership structure. Valve is a private company owned mostly by few individuals. In that sense, it is an enlightened oligarchy: an oligarchy in that it is owned by a few and enlightened in that those few are not using their property rights to boss people around. The question arises: what happens to the alternative spontaneous order within Valve if some or all of the owners decide to sell up?