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Draft of livelihood pods blog post

Livelihood Pods

For the last year some of us at Enspiral have been experimenting with a team structure we're calling a Livelihood Pod. This post is an overview of what I consider to be the fundamental principles of Livelihood Pods.

There are many people involved in this ongoing experiment at Enspiral so naturally, this post is just one viewpoint.

Suggested Principles

When playing with new terminology to describe an organising pattern it is important to define what we mean so we talk about the same thing. Doing this too early can stifle the creativity, doing it too late can lead to significant misunderstandings. After a year of explorations this is what I consider to be the core principles of a Livelihood Pod.

  • Cooperative ownership: Livelihood Pods are cooperatives and follow the 7 cooperative principles
  • Limited size: A Livelihood Pod has an upper limit - we don't know what this should be but somewhere in the 6 - 12 people range.
  • Scoped purpose: The purpose of a Livelihood Pod is to create livelihoods for its members. That's it.
  • Diverse income: Livelihood Pods consciously diversify their income streams and avoid coupling their financial health to a single client, product, business or individual.
  • Interdependent: They are deeply interdependent with other Livelihood Pods and are collectively responsible for the health of the wider ecosystem.

Cooperative ownership

The 7 cooperative principles are solid and have stood the test of time. Personally, I don't see the value of a cooperative legal form and am happy with a LLC that is designed to follow the cooperative principles.

The cooperative ownership model of one share per person with a consent decision making process for governance is one of the core things that has worked for us at Enspiral. I've witnessed over 50 people go through the experience of 'earning' their ownership share at Enspiral and it's one of my favourite organising forms.

It also has challenges and managing the balance of power and responsibility is no easy feat, particularly as the number of people involved grows, but by capping the size of a pod you can dodge a significant amount of challenges.

Limited in size

We don't know what the optimal upper limit of a Livelihood Pod is. Opinion generally ranges from 6 - 12 people, but we all agree that there should be one. Instead of changing the organisational form as people join a company, Livelihood Pods are designed to splin of other Livelihood Pods. This means you don't need to keep restructuring your team as a business grows or shrinks.

Rich Bartlett mentioned something in one of our catalyst calls last year which stuck with me. "Everyone who I check in with at Enspiral who is thriving is involved in a highly functional small team. The people who are struggling are often isolated." I've found this to be true as well. When people are embedded in highly functional small teams then they seem to do much better in other contexts.

There is some interesting lines of research from sociologists that I've summarised in my head as "Human's inate biases are highly functional in small groups and destructive in large ones".

Scoped purpose

I think the sole purpose of a Livelihood Pod is to create livelihoods for its members. In this way you can consider a Livelihood Pod a for profit cooperative and we use other commercial vehicles to focus our for purpose work.

Naturally, there is still a place in the ecosystem for purpose driven companies, capped return investments and not for profit communities. But by formalising Livelihood Pods as uncapped for profit cooperatives we can have a more nuanced approach when building multi stakeholder systems.

I've found that there is something qualitatively different about a team that is committed to the well being of individual team members above and beyond the success of any one product or line of business.

We are all familiar with organisations which treat people like commodities that are utilized to achieve a larger mission. The "mission before the person" approach common in the military. I think there is a place for that type of thinking and it is necessary for surviving the realities of market economics. But what if we only applied that thinking about teams instead individuals?

For example, your company is missing it's revenue targets and only has 50% of the income it needs to meet market salaries. Do you

  1. reduce everyone's salaries by 50% and keep folks fully employed?
  2. make half the team redundant and keep salaries at fair levels?
  3. something in else?

I think the answer depends on what sort of company you are. Choosing option 1 for most companies will likely be disastrous for the whole company. Likewise option 2 leads to significant trauma that is common in commerce as we know it.

What if the teams only role was to support the individuals it commits to? The whole team acts as a buffer for the hard nosed (and vital) economic rationalism that applies in negotiating contracts between teams?

Diversity of income streams

Too often we have seen amazing teams form around a single venture and then their collective fortunes are tied to that particular business opportunity. If things go well then the team will hire people and navigate the growing pains of becoming a multi-team venture. Or if they go poorly they will need to lose staff or cut salaries. The shape of the team becomes moulded by the product they are building and the market they are in.

Livelihood Pods are intentionally designed to have a diversity of income streams. People are working for different clients, applying different skills and investing in different products. There is still room for specialisation and Root Systems is a great example of a programming Livelihood Pod with resilient income sources.

I think there is an interesting line of research along the lines of "products, not companies". What if our branded ventures become quite lean legal structures which outsource much of the labour neeed to a network of high trust Livelihood Pods?

Would it be possible for successful products to scale better and more humanely by engaging a swarm of pods to meet its growing labour demands instead of reinventing its organising system every time it hires more people?

Pod Interdependence

For me, this is the killer principle which makes this organising form interesting. Livelihood Pods don't operate in isolation, there is the deep interdependence with other pods. We participate in a social, financial and information ecosystem and are collectively responsible for the health of that ecosystem.

We actively share learnings with each other about how we're running our pods. We intentionally hunt for leads and find mutally beneficial commercial opportunities. We help people who want to start pods do so.

A Livelihood Pod by itself is just a quirky little company, but I believe a swarm of them could shape a new economic paradigm.

Nuts and Bolts

Financial Model

There are two models we've seen pods experimenting with Mutual Support and Income Pooling.

A Mutual Support Pod is 'Livelihood Pods lite'. The members of the cooperative run all their commercial activities through the company but keep control over the majority of the revenue they generate. A small portion, 20% for example, would go into the pods core coffers and the team engages in collective decision making about how to spend those funds.

An Income Pooling Pod puts 100% of their revenue in the middle and engages in collective decision making on how much each person is paid, as well as how much to spend on team expenses. People can be paid different amounts but everyone in the team consents to those amounts, or to the process for determining them.

Like any other business venture, forming a Livelihood Pod a big decision and finding and choosing people the people you go into to be your podmates is no trivial thing. One of the ideas I have used when designing the Enspiral ecosystem is as 'a place where people can meet their future business partners' and we definitely benefit from this ecosystem when forming Livelihood Pods.

Having Mutual Support Pods is a way of de-risking the process of starting companies together and also allowing space for less collectivised philosophical perspectives in the Livelihood Pod space. The majority of Livelihood Pods at Enspiral (Root Systems, Golden Pandas, Protozoa) are Income Pooling. EXP use a mutual support model and that works well for them.

Questions

Feel free to post up any questions

Where did the name come from?

In 2015 I did a bunch of theoretical work on scales of organising. The idea that different scales of human systems are as different from each other as ice, water and steam even though the components are the same. I started using the langauge individual, pod, community and network to name different scales that I had seen at Enspiral and we started to explore multiple pods at Enspiral Dev Academy.

When Root Systems spun out as their own company they started using the term Livelihood Pod and Golden Pandas started using it as well when we formed shortly afterwards.

How are they different from normal cooperatives?

Livelihood Pods are a subset of cooperatives and I believe the principles outlined above (Limited Size, Scoped Purpose, Income Diversity, Interdependence) extend the principles of Cooperatives in an interesting way.

How many are there at Enspiral?

  • EXP (January, 2016)
  • Root Systems (April, 2016)
  • Golden Pandas (October, 2016)
  • Protozoa (May, 2017)

Who else is using the idea?

Ouishare? P2P Foundation?