Toward a Model Civic Business

The freedom to test and fail enables the private sector to be our primary source of experimentation, innovation, and growth. But we should reconsider the design and implications of private systems before wholesale adopting them as gatekeepers to public services and servants.

A version of this post was first published on Medium.

Civic tech has recently been the focus of exciting nonprofit federations, foundation-funded data visualizations, and the largest venture capital investment in government IT history. The problem is, no one seems to know exactly what it is — it’s like Potter Stewart’s definition of pornography, we all just know it when we see it. No matter the definition, as Stacey Donohue recently wrote, civic tech is most certainly open for business. The question is, though, what kind of business is civic tech?

Ultimately, a business model is the DNA of a company, and the only meaningful promise that it makes to the public — and its funders are the only people that it has a legal duty to serve. Historically, that meant that businesses prioritized customers, but the advent of venture capital changes that — now, shareholders define value. Before we spend the projected $6.4 billion of public money on new technologies, we should consider whether traditional business models are the right choice for our digital civic commons.

Civic, as a term, has always been loosely defined — there are a lot of variations, but they all seem to hover around contributing to the administration of a city, town, or government. The word actually comes from 16th century Latin (corona civica) to describe the crown given to honor a citizen for saving another citizen’s life. Matt Stempeck does a better job of articulating the original intentions the word “civic,” than most . He describes it as “prosocial,” or the act of addressing shared challenges.

Technology is an equally wooly word — I originally thought of technology as electronics, and then as a euphemism for the natural evolution of systems. The word “technology” actually comes from Greek, and originally meant the “systematic treatment of an art, craft, or technique.” The word technology, it turns out, is as much about understanding the relationship between evolving systems and their effects, as it is about building new ones. In other words, it’s not just about the system, but the causes and effects of those systems. As Rodrigo Davies pointed out recently, there can be a big difference between what a company sets out to do and the effects (both good and bad) that it has on the world around it.

Taken together, then, civic technology isn’t just about applying technology to solve shared problems, it’s also about understanding the relationship between the new systems we adopt and how we share the value they create.

Civic tech as a space, though, is predominantly defined by privately owned companies and nonprofits, meaning that when we spend public funds on them, we’re not only trying to understand shared value, we’re defining markets. The difference between private and publicly funded markets is that, theoretically, before a government spends public resources, it has to consider the effects of doing so. Not just on one problem or one group, but on the relationships and equality between groups.

That’s always been a big difference between the private sector and government — and, at times, a big source of tension. The private sector can do things that only tackle one part of a problem or only serve one type of person (usually, rich ones). Business doesn’t have to consider the larger effects of its work, at least not until it endangers shareholder value. Not only can business start with a narrower scope, but businesses can fail — in technology, some people (controversially) encourage failure. When government fails, though, it is usually the most vulnerable who suffer. The freedom to test and fail enables the private sector to be our primary source of experimentation, innovation, and growth. But it is also an enormous reason to reconsider the design and implications of private systems before wholesale adopting them as gatekeepers to public services and servants.

It’s fair to say that neither approach, taken to the extreme, is perfect — fully understanding the implications of a new system before it’s fully deployed is probably impossible. Conversely, deploying systems that solve the easiest version of a problem first, typically reach the privileged (with resources, social status, and/or coding skills) and leave more complicated versions to trickle down to the rest of the world. Trickle down system design isn’t good for democracy or global markets. Influence over the design of a system — especially one that controls public resources — is power.

Leadership is essentially the privilege, power, or position to architect decisions and decision-making systems for others. What’s different between public and private leaders is who they have to consider when doing so, and, more importantly, whether they’re ultimately beholden to them. Public engagement, transparency, and accountability aren’t new ideas, but their translation into the technological design of public systems is still in its infancy. The U.S. government, with excellent leadership from champions in a number of offices (DigitalGov, White House OSTP, 18F & USDS among many others), are taking a wide range of approaches to opening data resources through APIs and broadening digital public participation. Similarly, a number of strong civil society champions are starting to tackle the component issues, from Laurenellen McCann’s “Build With” campaign to Zeynep Turfekci’s writing on the social impact of closed filtering algorithms to Kate Crawford’s provocations of big data as a tool for governance. All of this is remarkable progress in a relatively short amount of time, but this kind of change will require more than public advocacy, it will require a different kind of business.

One of the unique aspects of media companies has always been the ability to sell the presumptive attention of its customers. The ability to sell a product, and then sell the attention of the users of that product, has always presented a challenge to integrity. In legacy media, that was the separation between editorial and advertising departments. In digital media, you can cut out the middle — namely, the independence of the product — and directly sell user attention to advertisers. That ability has fueled a massive industry, building some of the world’s largest companies, and — as Ethan Zuckerman points out — distorting the relationships, services, and content that communicate through digital tools. That distortion may seem trivial when it means the difference between an article and a listicle, but when it means voter manipulation or the presentation of evidence in court, it’s much harder to ignore.

Despite the exciting emergence of new models for civic engagement, the businesses themselves are largely built on traditional incorporation structures. As Keith Porcaro pointed out, even with the best intentions, traditional corporate structures have built-in limitations that make them imperfect trustees of any promise — let alone as gatekeepers between governments and the public. One of the largest limitations is the singular legal duty to maximize shareholder value.

Traditional incorporation structures legally require businesses to create, centralize, and maximize value for shareholders. That is a fundamentally different than, although sometimes overlaps with, maximizing value for users. Even newer “social” business structures like B Corps, only broaden what a company “can” consider in formulating fiduciary duty — they don’t require, define, or compel any standard or duty of service to the company’s customers.

In the long term, it’s possible for shareholder interests to align with those of users. However, there’s a lot of market pressure to grow, which means going to investors for capital. Most investment is done through 10-year funds, meaning that companies have an average of 3-7 years to grow 10x in order to meet exit expectations. When that’s the baseline, the priorities tend to be managing growth and maximizing revenue. Often, the quickest and easiest way to do that is selling advertising. Selling advertising isn’t inherently bad, but it does create a set of often conflicting priorities between the business model and the integrity of the product. When that product or service is replaceable, that’s fine. But once it becomes essential, when it becomes the only opportunity to reach an elected official or avoid jail, the costs of those conflicted priorities can be much higher.

There’s cause for optimism — the rise of patient and impact investing funds suggest that there may be room for different growth models in civic tech. The open data and open source movements are gradually reducing public dependence on individual technology companies (in both good and bad ways), and governments are starting to invest in building digital engagement capacity in a wide range of sectors. And, of course, there are vibrant and growing digital civic fellowship and volunteerism programs. Still, there’s no question that big, traditional businesses will continue to play a huge role in the evolution of the way that we engage with public institutions and each other.

So. What, then, does a civic business look like?

A civic business should have a responsibility to the public, not only in outcome (i.e.  externalities), but in its fundamental processes. The core of any organization is how it prioritizes and applies its resources to meet the needs of its users. In civic technology, the users are both governments and citizens — and their needs are incredibly diverse. Despite a lot of discussion of “user” and “human” centered design, ultimately civic tech needs to find ways to serve all users, as equally as possible, as their needs evolve and change. That means that civic businesses should be more than open, they should develop models of direct and representative decision-making. As others note, more direct input into civic processes is important in both digital and analogue spaces.

As Doc Searls’ Project VRM does a great job of explaining, customer empowerment (and independence) requires more than a business model — it requires an ecosystem. But every ecosystem has to start somewhere, and in the civic space, that means rolling up our sleeves and working together to build a better business model. Civics are about working together to save our commons and each other — there’s no reason that defining the intertwining relationships between government, people, and businesses should be any different.

Sean Martin McDonald is the CEO of FrontlineSMS. Frontline helps governments, businesses, technology providers, and nonprofit organizations translate what they do into text messaging microservices, enabling them to reach more people, more efficiently.