Our working definition: a network of individuals, or agents, who share a common goal project or venture, who also share a set of values (culture / ethos), and agree to undertake on a set of actions (methodology), using a specific set of tools (infrastructure), and a specific set of rules governance. These individuals maintain relations with other individuals in other contexts that can be far removed from their specific context of activities.

Organizations are living systems.

We can distinguish between the agents and the organizational structure, which is a set of formal elements such as rules, methods, tools, roles, etc.

Williamson (2010) encapsulates the core of economic organization as "The ultimate unit of activity... must encapsulate the three principles of conflict, mutuality, and order. This unit is a transaction".

An OVN is a type of organization.

Organizations are determined by their sphere of activities, mission and goals, economic reality, etc. They are also determined by what some call superstructures, which are non tangible, but subtile and hard to formalize inter-subjective representations such as shared feelings and beliefs, norms, values and other cultural elements. Since these superstructures cannot be well identified, verbalized, formalized, categorized they remain uncapturtable. As such, they resist any form of dogma or domination and constitute the substrate of organizational and social transformations. They constitute an invisible conjunctive tissue that operates mostly in a p2p mode, between agents,

Alternative views and definitions

The term organization can be defined in a number of ways, such as a process, as a structure of relationship, as a group of persons, as a open dynamic system and so on. Structure and process are two complementary and strongly interrelated views of the organization. Organisation can be seen as a structured, on-going process that defines how to achieve pre-defined goals.

An instrument for achieving organizational goals
A process of fixing duties and responsibilities (i.e. roles) of agents in an enterprise so that shared goals are achieved
A coordinating point among various agents for the attainment of enterprise goals
Helps in efficient utilization of resources by dividing the duties of various agents (role allocation)
The creation of relationship among persons and work so that it may be carried on in a better and efficient way
The mechanism developed to unite the efforts of the people in order to realize the set objectives.

Generates a sense of purpose or goal, is driven, is a venture, an enterprise, projected in the future, something to be achieved. Identification/surfacing of rewards and benefits. Presence of planning for effective execution, defined roles, duties, tasks for every role, relationships between roles, and between roles and resources and processes, allocation of members to roles. Identification of authority and responsibility.

“... the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.” — Louis A. Allen

Organization through metaphors

In his seminal work on Images of Organisation (last edition 2006), Gareth Morgan provides eight different metaphors to map organisations.

The machine metaphor encompasses theories such as Taylor’s scientific management, Weber’s bureaucracy and views of organizations that emphasize closed systems, efficiency and mechanical features of organizations.
The organism metaphor depicts organizations as open systems that focus on the human relations and contingency theories.
The brain metaphor focuses on the cognitive features of organizations and encompasses learning theories and cybernetics.
The culture metaphor emphasizes symbolic and informal aspects of organizations as well as the creation of shared meanings among actors.
The political system metaphor encompasses stakeholder theories, diversity of interests, and conflict and power in organizations
The psychic prison metaphor draws from psychoanalytical theories to examine the psyche, the unconscious, and ways that organizations entrap their members.
The flux and transformation metaphor emphasizes processes, self-reference and unpredictability through embracing theories of autopoiesis, chaos and complexity in organizations.
The instrument of domination metaphor draws from Marxist and critical theories to highlight exploitation, control and unequal distribution of power performed in and by organizations.”

(Örtenblad et al, 2016)

The OVN is more closely related to the flux and transformation metaphor.

Process of Organization

In traditional organizations

Step 1: Determination and classification of firm’s activities.
Step 2: Grouping of the activities into workable departments.
Step 3: Assignment of authority and responsibility on the departmental executives for undertaking the delegated tasks.
Step 4: Developing relationship amidst superior and subordinate, within the unit or department.
Step 5: Framing policies for proper coordination between the superior and subordnate and creating specific lines of supervision

In OVN

Step 1: Determination and classification of OVN’s activities.
Step 2: Grouping of the activities into roles.
Step 3: Design of the role system and specification of the flow of agents to roles. Assignment of roles when necessary.
Step 4: Surface relations between roles
Step 5: Framing policies for proper coordination between roles, peer review.

Organizational structure

See page on Organizational structure/architecture.

An OVN is an emergent organization, which means that its structure is evolving from its activities, within a context, and may change as its interactions with its environment changes (capacity to adapt).

If we consider organizations as living systems the structure doesn't completely describe the organization, as the organization is not a machine, it doesn't run like a clock or like a car. The structure is a set of boundaries that constrain processes in a way to diminish the probability that the organization exhibits some undesired behavior. Within these boundaries the organization can evolve and its or future states, which determine its behavior, is not entirely determined by its structure. The organization remains a complex and emergent entity, with behavior that cannot be entirely predicted from its structure or future states. Thus, the structure under-specifies the organization. The main goal in formalizing a structure (make it visible in a coherent and consistent way) is to be able to use this representation as a guide when it comes to organizing activities, in order to maximize organizational welfare and help individuals better achieve their goals.

The structure determines relationships among agents who are involved in processes (who perform organizational tasks and duties), and among agents and resources. Organizational tasks are clustered into roles, which are clustered into areas/domains of activity (equivalent to departments in traditional organizations). Example of general / procedural domains are: Process, Capacity, Deliverables, Dissemination. These fundamental domains are applied to other domains such as R&D, artistic work, communications, etc.

Through governance, structure also informs relations of authority-responsibility are also called vertical relations, involved in hierarchies. In OVNs authority is based on reputation, which has dimensions of demonstrated knowledge and experience, commitment, etc. Authority is understood in context, for a limited time, as no permanent authority exists in OVNs.

Relations between areas/domains of activity are called horizontal relations.

The structure also specifies division of work/labor and shows how different functions or activities are linked; to some extent it also shows the level of specialization of work activities. It also indicates the organization's authority structure and shows its reporting relationships. These are horizontal as well as vertical relations.

Organization and individual behaviour

We can distinguish between the behaviour of the entire organization and the behaviour of individual members. There's a chicken and egg problem here, as in individuals shape organizations according to their values and in turn the organization shape's its member's values and behaviour.

We speak about unintended consequences when a group of individuals design an organization (its structure) with the intent to respect and reinforce a set of values for its members, but in turn everyone experiences an opposite effect.

Organization and property

See more on the notion of property.

Organizations encapsulate systems of motivation and incentives, which provide a value experience (more on value) to their members, i.e. moves its members into action, a coordinated action that leads to achieving the common goal(s). These motivation and incentive structures depend, to a great extent, on the property regime(s) that are practised within the organization. See more on organizational structure.

Functions of organization

Why we get together?

Achieve more as groups of individuals.
Purpose, individual fulfillment.
Reduce cost of transactions, provision of resources.

See Ronald Coase's transactional theory of organizations: people form organizations to diminish their transaction costs. In other words, an organization can exist only if it offers an environment in which the transaction cost among agents is lower than in other settings. This is a very important idea in the OVN model, because it explains why open networks can exist. The reason is that digital technology has lowered the costs of transaction among individuals, even strangers (ex. blockchain / Bitcoin, a trustless network).

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Organisation

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