Ethos

= also called 'Ethos Valuable Outcomes'

URL = http://www.ethosvo.org

Description

Robert Pye:

http://ethosvo.org http://teamarmy.org http://skillsplanner.net http://buildlondon.org http://geomii.co http://futurecities.ethosvo.org

• "Ethos is a collaborative commons (that has a UK legal entity called Ethos VO Ltd - a company limited by shares). People invest time and money through Ethos (we are now exploring become a fund manager for social finance)

• Each individual exchanges value with the commons via a bespoke Value Exchange Document (VED). These can vary dramatically and are tailored to suit the passions of each member (owner)

• The organisation (Ethos) is set up to run at very low overheads and is designed to produce a surplus (dividends) each year (e.g currently 65 owners = 25 FTE = £25,000 per month fixed costs and about £400,000 profit after tax last year)

• We pay people in Ethos-coins according to our own value accounting methodology. For some clues - we are using complexity-theory and micro-narratives.

• We share out all the profits each year and deduct all £ payments from individual Ethos-coin accounts.

• We manage all this via a virtual "company" - cloud based finance system.

Shares (which don't pay dividends) of Ethos are allocated to members according to the value they have added. There is a plan for members to be able to release their holdings in the commons or transfer between commons or "the real world" using our equity structure and valuation.

Our Ethos-Coin system can therefore be summed up in a few words:

"it is a private currency whose primary purpose is to allocate future dividends of Ethos VO ltd"."

The Value Exchange / Value Recognition System Used at Ethos

Robert Pye:

"Ethos’ own contribution to the Commons is the Value Exchange / Value Recognition process and some fairly heavy experimentation on the systems theory that underpins it. We have developed a set of tools which we have now made open source. Of course, they are no use if nobody is using them. Their target needs to be those who are rich in the mainly developed nations. Underprivileged, excluded or disadvantaged people too can certainly benefit as well but the enormous resistance that will come from those who seek to perpetuate current behaviours rather than change must be our main target. This is the culture change at its most difficult.

Value Exchange and the above arguments present significant issues for me personally – not just for those I talk and work with. I need to figure this change for myself. I must change the last line of my current mission and deal with the fact that some aspects of personal change scares the wits out of me! I don’t yet know what some of that painful change looks like. It’s not just my household carbon footprint which is large but the social / biological impact of my work environment even though it has been mostly virtual now for over 20 years. And I have been on two international holidays per annum with most of my family each year up to the pandemic.

What are YOU going to do? Recycling is a worthy step, yes! Talking and doing with others – brilliant. Yes! Doing more social / environmental stuff. Yes! Building and executing you social value exchange? That’s awesome!"

(https://www.ethosvo.org/our-value-exchange-dynamic/)

Discussion

Robert Pye:

"At Ethos our narrow frame is about service innovation. We get involved in products but not to invent them. We mostly buy them. Hence our value add is mainly knowledge based but capital expense can certainly enter into it as the project may have huge capital requirements (solar PV, for example).

Our "value exchange agreement" is meant to state terms between an individual and the "commons" which is Ethos. We have only done it for 40 people who equate to about 18 FTE's (full-time-equivalent's). But the plan is to take this to 6,000 (or somewhat less) be 30 November 2018. We have conceived our own commons as being a fixed size and asset value (£100M by 2019) and we are working our metaphorical fields to achieve this valuation in this time frame.

The term "Co-creation of value" for Ethos is mediated by our value exchange agreement. Each individual must have at least one (currently nobody has more than one but it is theoretically possible). We have three things we use to deliver this separately:

1/ Share-holding of Ethos: allocated by strategic value. I started Ethos with zero and have earned 4.2% over 4.5 years. No partner may own more than 10%.

2/ Off-balance sheet debt. This is a private agreement of the partners to "pay back" time banking or "sweat" contributions. Currently, the debt is about £1M

3/ Cash. Monthly, through expenses and Dividends. Most cash comes through dividends. This years target is £500k after tax and it is distributed entirely on merit.

This could be considered our value accounting system.

We are not vertically integrated at all. It is a horizontally integrated model open to all. Out city structure mean that we can have an Ethos in Every city and try contributing to the global commons. All of our work has to be defined as well formed problems that can be proven to be beneficial to humanity after we have delivered the outcome.

Perhaps one subtle but important difference. Our meta model is based on three entities: problems, people and organisations. We start with problems not organisations, that the key difference between the network society and an industrial one. Problems (imagine them as sentient) attract people and resources the people are mediated to one type of commons or another through a VED and networked organisation are established or adapted to service the solution to each problems. This is key. Another key difference we have is that the value is not "per product" or "per problem". We have many problems and only some of them become stars but the moderation is about collective good, collective benefit. It's not a political ideology and its not as polarised as capitalism but some people will end up getting rewarded for poor crops and some people will have their rewards moderated for stunning performance.

Or organisation is based on values: collaboration, trust and moderation. Open to all but agreeing a VED is mandatory and the process to becoming a partner ensures that there is a good chance that co-creation is possible by mapping the problems to the innate capabilities of the participants. There is also an instrument for fund raising at the Ethos level through members or through external financing through subsidiaries but only individuals can own Ethos not institutions." (email June 2014)

Value Recognition Within Ethos

By Robert Pye:

• Income Categorization

Total about £1.5M+ turnover. Pre tax profit £400k

Annuity (fairly predictable, every year): 40% Project based work 60%

By type of revenue: Commercial: 50%, Gov Grants 40%, Local Gov 10%

By “business line”: Sport: 50% Smart: 30% Skills 20% Consulting: 10%

• Costs Categorisation

Monthly about £20k fixed costs. People based and expenses (£10k salaries), £10k expenses. No materials or CAPEX really. People (FTE 18) currently - these figures are remarkable!

Partner Account Debt (PAD): This is a fantom company (managed by clearbooks SAAS) that is used to record value acknowledged by Ethos where cash is not extracted at this point. It exists outside of the Ethos VO balance sheet as a private agreement amongst the partners of Ethos. It currently records £1,183,330 of debt that will be repaid when the individuals VED is evidenced through Ethos VO dividends. This is the primary cash extraction mechanism in Ethos. So far the PAD has been topped up with notional rates of about 75% of a median market rate where Partner input is valued. This is also topped up as a function of output as well as input.

• Individual income

Everyone needs cash to pay their bills. Until such times as Bitcoin and alternative economies take off, that is! Each partner has a value exchange which sets out the basis for exchange in the broadest sense. Every individual has their own story about how their proposition works and develops. I would like to capture the value exchange of every person in Ethos and build stories for everyone.

My own story has been a long running one between corporates and entrepreneurship. In 2010 I had a pot of about £250k of savings to buffer the start of Ethos. For the tax year ending April 2010 I earned a salary of just less than £500k. This included a “farewell” package from my previous employer. My outgoings are pretty high as I have three kids in private school here in the UK so Ethos is not a hobby for me it is a professional interest as well as so many other things.

Our first project was Team Army and that took a very long time to get up and running. For the remainder of 2010 and for the tax year to April 2011, I went without any salary or income whatsoever. For the 2012 Year my income and business expenses totalled £47,586 in 2013 they were £55,639 and for 2014 they were £65,439. If my income grows by at least 20% (up to say £150-£200k) I will be able to “afford” to continue the Ethos experiment indefinitely. I am pleased to say that we are on track currently. So as of August 2014, Clearbooks says that I have accumulated (520,461) in value. Of this I have received £182,000 in cash and this leaves £369,000 in my partner account which I will receive when this value has been monetised via dividends in Ethos...

If I represent the biggest investor, then everyone else operates somewhere else on the continuum between my extreme and operating purely on a service contract basis. The ultime other end of the scale is as a “wage slave” and I am proud to say that we don’t have anyone at this extreme. Nor do we ever want anyone here. The closest we have is (say) a contractual relationship with a partner. As an example we have a technical resource whom we charge out at £450 per day and pay them £375 per day." (email, August 2014)

Minimum cash needs met through Ethos

"Ethos operates entrepreneurially for all partners. With few exceptions (such as an urgent need, fixed job description, or partner playing a key role in the admin team), partners are expected to be responsible for their own value exchange and their own financial plans and needs. Cash returns typically involve a progression through the various levels outlined below. As Ethos grows and matures it is our intention to be able to secure more regular, guaranteed and stable cash exchanges with an increasing number of partners. However the philosophy of this progression we hope will hold. It is important to note that our ability to pay partners monthly cash guarantees, dividends and bonuses is worked out at the Ethos level not on a project by project basis. Therefore your cash income cannot be calculated by looking at project incomes although there is inevitably some correlation (e.g. you move up a level when the value you have accrued generates revenue).

The cash you receive is made up of a minimum monthly cash contribution plus bonus/dividend/share allocations. Those partners who are able to defer cash demands can be offered either shares or increased Partner Account (PA) accrual as an incentive for deferment. The table below outlines the minimum cash allocations:

Level 1 = Partner but PA account not growing (inactive). No cash.

Level 2 = Partner, ad-hoc. Accruing a PA in a valuable way. But no delivery / sales so no cash.

Level 3 = Regular value exchange (including projects) so minimum wage paid, or cash on value

Level 4 = Monthly cash at a reasonable rate but still basic needs level (e.g. £3k)

Level 5 = Monthly retainer all needs covered (but still at some discount to a “market rate”)

Level 6 = Happy days! Self-directed financial interests being realised

(email, August 2015)

More Information

• slide deck with explanation about Ethos.

https://docs.google.com/file/d/0BxTEXuxJ2eWZc0RuaFE4RjVmVzA/edit

• discussion about the profit and benefit sharing mechanisms at Ethos, http://epp.ethosvo.org/profiles/blog/show?id=6372731%3ABlogPost%3A30803&commentId=6372731%3AComment%3A30961&xg_source=activity