Good stuff first: we're still here 3 and a half years later, there are 15 of us (up from original 4). We started with no capital except for £20,000 from the founders ($30,000). We took on 2 people with zero IT skills, trained them for free and got them to the point where they were able to make a living (one still works for us). We're distributed: we have offices in two towns in England (people are able to work from home at least one or two days per week) and individuals who work in Switzerland and Canada (and in the past, Brazil). We have created and (just) released an open source content management system, and the organisation is run pretty much entirely on open source software.

Next a bit of history. We started out very much with distributed decision making. All important issues were discussed amongst everyone, and decisions made either by informal consensus or on the basis of a majority vote. This continued until we got to around 8 people, when it started to get a little unweildy. We began to find that we took too long to make decisions, and often found ourselves revisiting decisions that some people thought had already been made. These were key decisions such as those about structure, product vs. service, platform to adopt, etc. etc. Some of us felt that there were compensations; though decisions took longer they were more robust and there was buy-in. There was certainly a very high level of belief in the company from all participants.

So we streamlined decision making in an equitable way. We formed a series of working groups around key issues: project management, codebase, systems administration, operations and reporting. Each of these groups had a leader (the person best placed) but anyone could volunteer to join. The group explored options, wrote documents, and recommended decisions. The idea was that this would streamline the discussion and exploration stage - and for a while it worked. It's continuing to work in some areas - system administration for example.

But as we grew larger, even this began to creak. Somewhere around 12 people things began to change, whether caused by the numbers or not, I'm not sure. In fact I think it was multifactorial. I'm very conflicted about what happenned next, and in fact right now its a crucial issue.

Though our culture remains very inclusive, the last major and crucial participative decision was made at the end of 2002. This was on what we were going to do with our software - a decision that affected everything from project management to marketing. The details aren't important, but after 5 days of special 2-hour sessions (facilitated) in which everyone participated, we made a particular decision by majority vote.

This decision took us down a path which got us into trouble. We got into a long internal project which we failed to keep control over. After 7 months, the project was essentially abandoned.

Now a crucial point: when we founded the organisation, we set it up as a limited company (equivalent of LLC), not as a co-operative. The founders were the directors of this company. There were a few reasons for doing this: 1) it was easier - we knew how to do it and in England it's really easy and cheap 2) we were worried (not sure if this was justified) that clients wouldn't take us seriously.

In our first year to 18 months we (the founders) had long long discussions about how best to distribute ownership and power to the rest of the business. Eventually we came up with a really complicated scheme under which the founders would, in the long term, retain 20 percent of the shares in recognition of the capital they'd put in, and 80% would be distributed amongst all employees (including the founders) in proportion to length of service, and in some respects in proportion to peer-reviewed performance. We discussed this, and we agreed it, but then we didn't do anything about it. Why not? Because it was too complicated. Because there weren't really any profits to distribute so it was partly a moot point. And eventually because we (the founders) ended up running the company.

Why did this happen? The market got tough. We made some mistakes. We were surviving, but not moving forwards. Some people within the organisation started talking about needing clearer leadership. The board was divided on the issue, but there was enough consensus to continue working.

Then revenues dropped to the point where we couldn't pay everyone what they were expecting each month to pay their mortgages. So the founders (who were still the owners) stopped taking any money out. This was only supposed to be temporary, but it continued. In the complex game of 3-d chess that is business, the problems had a good deal to do with 2 particular legacy projects that were dragging us down: poor management, difficult clients, oversold projects - things we've since learnt not to do. We found it difficult to close these projects, and they continued to hit our revenues. Plus this was happenning at the same time as our internal project was going wrong.

So, the founders ended up taking a big hit (a year without pay). So that made them feel they were owed something by the company. At the same time, the problems we were experiencing were diagnosed by some as a lack of leadership. The problem projects had, co-incidentally or not, been done by the 'left wing' of the organisation, so blame was laid there, and it was difficult to argue against this (though the problems were certainly multi-factorial).

The result was that the company was increasingly run by the board. There continued to be a great culture of inclusivity, but more and more things started happenning behind closed doors. Maybe co-incidentally, some of the original idealists left one by one, deciding business was too tough, the strategy wasn't right or whatever. A few went back to academia (where many of us had come from).

So we're standing now at the cusp of a change. It looks very much like we're going to become just another business. Hopefully a good one (we have a very good reputation in our market: the problem projects have been outweighed by a lot of good ones - and we're very well positioned for various reasons) but a company nonetheless. The model now is a partnership - people will be promoted to partnership and ownership. There's a debate about wide versus narrow ownership, and more and more it looks like narrow is winning. People are talking about developing commodity offerings and farming out unskilled work to developing countries. It all looks very different.

It's *so* complex that it's difficult to give anything other than a selective, biased view of what has happenned. But it's true that right now (i.e. in the next couple of weeks) we have to make some decisions that will shape the future direction of the organisation. The right wing (not just represented on the board - in fact the board is more left than right) seems efficient - they get things done, they can point to the numbers - they don't recognise the softer things that can't be measured. The left wing is demoralised - depleted in numbers by defections back to academia, feeling the weight of blame for things that have gone wrong. But we don't want to give up on the ideas around which we set up the company. There doesn't seem much room for compromise left, despite strenuous efforts. We're balancing what's right for the organisation (what will pay people's bills) with what's true to ourselves, with what is fair as a representation of others views in the organisation. It's tough right now. All comments welcome

Sounds fairly similar to that of another programming collective I know, but I'll leave that to another day.

Here I just want to say that you should look into the LLP (Limited Liability Partnership) structure for your company.

It is a very flexible structure, managed by a member agreement that can be freely designed by the members (much like a normal partnership).

See

http://www.startinbusiness.co.uk/features/ch_260301_llpforms.htm

Thanks for the comment (and your site - interesting - we should meet up some time).

I've looked into turning into an LLP, but you can't go from Limited Company to LLP, only from partnership. We'd have to shutdown and startup again (or start a parallel organisation).

Also, I'm fairly convinced that our problems (and the solutions to them) are social and cultural, more than to do with the form of organisation.

the collaborative process has been deemed clumsy.

you would like to continue developing the product.

publish the project at this stage

open it to contributors/financiers with value shares to their work/funds

keep a percentage of shares for the original developers.

one last step

- seek and pay for a visionary project manager

i am sure you have tried all the

"trendy linux methods"

consider your next project of your company as

method development.

with this anything is possible

do nothing until this is tried and tested.

What are the things that can go worng with Recognition Progamming?