Let's have a look at the basic areas which the group tools cover, first:
- Rights and permissions
- Decision making
- Ownership
- Communication
The challenge in trying to setup a flexible, powerful and secure system involving at least some of these funtionalities is in no way new. Many software systems need such functionalities and there are proven solutions or models for combining them in a straightforward way. You can find such models implemented in many collaborative systems; especially in workflow automations tools.
But lets get back to the areas of functionalities and their current problems first.
Rights/permissions
The most important step towards more usable group tools surely is a more granular system for assigning and delegating rights and permissions. Currently there some three dozen abilities you can get by creating or joining a group. The following collection is taken from Midtowns summary and is not neccesarily complete:
- Founding the Group
- Naming the Group
- Paying for the Group
- Decides to Keep Open or Invitation-Only Membership
- Decides to Make Public Group Name in FIND GROUPS
- Decides to Make Public Members' Names
- Invites Members
- Expels Members
- Invites Officers
- Expels Officers (currently not possible as officer recall was removed)
- Names Titles
- Pays Purchase Price of Land When Buying for Group
- Names Land and Describes Land
- Puts Land in Find Places With Check-Off ($30 Fee Debits Equally from All)
- Puts Classified Ad on Land Parcel
- Sets Landing Point
- Returns Prims
- Parcels Land
- Sets Music/Video Stream
- Sets Land to Sale to Anyone Out of Group
- Puts Land to Sale to Specific Person
- Takes Land Out of Group Through $0 Sale to Self
- Accepts Deeded Land Contributions
- Announces Events on Events Calendar
- Deeds Objects
- Collects Portion of Membership Fee
- Sets About Land Options (Edit, Fly, Outside Scripts, Damage, Create/Edit, Landmark,)
- Starts Election to Move from Member to Officer
- Pays Tier Contributed to Group
- Announces Events on Events Calendar
- Sets Home to Here on Group Land
- Makes Proposals for Votes
- Makes Group IMs
- Collects Portion of Income
- Collects Portion of Dwell
- Leaves Group
The biggest problem with the current group tools is the fact that specific sets of these permissions are given to three different groups of members: the founder, the officers and non-officer members. And some of the most powerful permissions are given to all officers. So every officer can take out (buy for 0 L$) group land for example and kick out any non-officer member. Delicate. (Prokofy made a nice blog post about this talking about "Imagine if the Pizza Guy Stole LL".)
Thats why I - and others before me - think it is unavoidable to be able to assign the permissions on an atomar level. The result could be someone, for example, who is able to terraform land or set the media stream for a parcel of group land, but can not change the price of that parcel; or someone, who can invite a new member, but can not expel members. etc. etc.
Of course, this would result in a new permission called "Be able to set the permissions of some other group member".
Roles
Setting the rights for every new member on an item by item basis can become a very tedious process; especially when the list of possible permissions gets longer. And it will become hard to keep an overview which group members have which rights and how the combination will affect their abilities in the group.
The proven solution for this challenge is the idea of Roles. A "Role" is a collection of rights that is assignable to a group member in one step. For example we could have a role called "Junior Officer" which includes "May invite new members", "Terraform Land" but not "set for sale" or "expel". Convenient.
Of course, this would result in a new permission called "Be able to define a new role" and "Allowed to assign a role some other group member".
The atomar assignment of permissions alone will correct many deficiencies of the current group tools. Introducing roles would keep the assignment and management of permissions efficient.
Implementing a full role-based permission system might cost an effort that is more than LL currently plans to spend on the renovation of the group tools. A simpler solution might be to have 4 or 5 different types of group members (not only "Officer" and "Member"

Decision making
The only support for decision making SL currently supports is the group vote in which every member has one voice - and the result is simply a message to all group member telling is, if the Yes-votes reached a certain limit. This is unflexible, too. If you look at "real" organisations there are all kinds of decision making processes from dictatorial regiment, majority votes to unanimous votes, with veto rights and so on.
I would like to suggest, that the new group tools at least would offer the possibilities to vote for some decision inside one sub-group (all members given a specific "role"; see above), to still set the quorum to anything between "one voter" and 100% and to weight the votes.
For example it should be possible to define the quorum for a vote inside
- All group members
- All group members voting this time
- All officers
- All officers voting this time
- All group members who deeded some land
- ...
Votes should be able to be weighted by
- One resident one vote
- Tier deeded
- Other way to define a "share", maybe by "amount of entry fee"?
If such a flexible system would be implemented and combined with the above-mentioned system of role-based assigment of permissions, you could model nearly every form of First Life "group" from a social club to a corporation with just one simple model by combining the options. (And if even multistage votings would be implemented, one could even model "checks-and-balances" types of organisations. But that probably would be asking to much for 2006.)
To be continued ...

DISCLAIMER A: This text in no way tries to define a perfectly thought out and checked solution for the "new group tools" problem. It presents only ideas tried and tested in other realms of IT-based human collaboration.
DISCLAIMER B: I don't claim that the ideas presented here are "original". I am rather sure that many have been presented in similar form in other threads on the forums. I am very sure that they can be found on other sites in the web (as I have said: they have been tried and tested elsewhere).