Open source for MBAs: A primer

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If you’re neither a scientist, nor active in the open source community, it can be difficult to properly understand why people write open source software. Why would people just give away the products of so much hard work?

I fully understand why one would be wary of a free product with no apparent profit model. After all, it’s only proper caution to check for Trojans when receiving a horse.

The trick with open source software is to think about it in different terms. Traditionally, if you needed a piece of software or documentation or some other product that can be copied or photocopied, you had two options:

  1. You could find something that met your needs and then pay per-seat or per-site for a version someone else had written.
  2. You could hire someone to create your own version from scratch.

Paying for an existing solution can get expensive if you need a lot of copies, but writing your own version from scratch usually costs even more.

Using someone else’s solution makes you dependant on them for fixing bugs and writing new features, but writing and maintaining your own draws resources away from competing in whatever markets you occupy.

Open source provides a third option with a slightly different payment structure. Instead of money, open source vendors want you to pay for their software in externalities and, if they’re lucky, maybe you’ll chip in with a bug fix or a new feature to sweeten the pot for everyone.

One popular way is to set up a business to sell support contracts to businesses using the software in mission-critical places…often at prices lower than large companies who know they have you by the unmentionables.

Here are a few other examples of externalities that commonly motivate people to give away their code.

  1. If you write a piece of software to solve your own problems, up to 90% of the time and money you spend on it over its lifetime can be spent on maintenance. If it’s not the "secret sauce" that makes your business competitive, then it’s just an expense and sharing the code with the world is a non-taxable payment for good publicity and an air of progressiveness in the eyes of potential employees. It may also reduce the amount of money spent if someone else fixes a bug and submits the fix back to you.
  2. On a more individual level, we all like to be acknowledged. Contributing to an established open source project or founding one that becomes popular is one of the quickest and easiest ways to build a favourable reputation among your peers, expand your resumé, and gain portfolio pieces that aren’t crippled by restrictive copyright terms.
  3. Why involve the overhead of charging for your software, collecting sales tax, and then paying the money to advertising agencies to set up "viral marketing" campaigns, when giving it away for free cuts out the middle-men and takes you straight to "If people use your software and like it, then they will tell their friends and co-workers.”"(Genuine word-of-mouth advertising is also more sincere and, therefore, more lasting)
  4. If you run a successful open source project, nothing makes a better business card for your support services than letting potential customers use and customize your software for low-risk applications for free. Even big companies often use a variation on this technique when they allow a certain amount of illegal copying in order to get individuals hooked on and familiar with their products. Open source just introduces honesty and a better ethical and moral framework to the technique.
  5. If you give away your software for free, like many companies do with the "non-Pro" versions of their tools, people are dependant on you for any changes they need. Fixing bugs, adding features, etc. That’s a heavy burden to carry and, if you fall behind, it’s bad for your reputation. If you release the source code, you are granting skilled users and companies the ability to fix problems they encounter, and then to offer the fix to everyone without putting more pressure on you.

Just because open source developers and vendors aren’t getting paid for their software in money doesn’t mean they aren’t getting paid. To an open source developer, their software is their business card, a pride-worthy piece of art they want to share with the world, a tool they crafted to fix their own problems, a foot in the door for related products and services, and the seed for a group of like-minded people to collaborate with.

Also, while it doesn’t necessarily affect the bottom line, programmers often have a deep understanding of how easy it is to copy software, which makes one’s job more satisfying if they know they’re being paid for their time (which is a scarce commodity) rather than copies of their software (which are vanishingly cheap to make).

As a final acknowledgement, if you are considering sharing software that you’ve written yourself, there are a few hidden gotchas to getting a community to form and they all boil down to whether or not potential participants feel empowered. Here are the basic rules:

  • Use an un-modified version of a popular license that people know and understand, like the Apache license or the GNU GPL or LGPL licenses. Legalese is scary and programmers aren’t lawyers.
  • Write clear instructions on how to compile a working program from your code. Make sure they actually work on a freshly installed machine. (I use VirtualBox for this.)
  • Provide an easy-to-use system for filing bug reports and feature requests, and offering up contributions. There are many tools for this as well as sites which will host your project for free. (I suggest GitHub or BitBucket.)
  • Strive to make participants feel that their concerns are being listened to.

In short, there needs to be a smooth learning curve that can take people from "just wandered in" all the way up to "respected participant."

This article was originally posted on Stephan Sokolow's blog under Creative Commons license.

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6 Comments

shawnhcorey's picture
Open Minded

"Why would people just give away the products of so much hard work?"

Because 95% of people will give something back: http://www.guardian.co.uk/science/2012/jul/15/interview-dr-love-paul-zak

--
Don't stop where the ink does.

ssokolow's picture
Open Minded

Very fascinating research and thank you for that article, but that wasn't exactly what I meant.

When I wrote that line, I was trying to sum up what an outsider might think while looking in... especially given that so much of the return from sharing your code isn't directly and obviously visible.

shawnhcorey's picture
Open Minded

It is not directly and obviously visible because it's not taught in schools. Does the Earth go around the Sun? It took Kepler and Tycho years to prove that out. Many things we assume to be direct and obvious really aren't. It's just that we had to memorize them in school. :)

--
Don't stop where the ink does.

Robert David Steele's picture

This is a very nice and useful post that is being included in the daily free Open Source Everything Headlines that appear each evening at 2200 Eastern. Short URL to the stack is http://tinyurl.com/OSE-ALL. Twitter hash is #openall.

Two comments:

first, we are long over-due for starting to teach everyone why we should be "all in" on the open source meme, open source software is much more valuable if it is part of an open source ecology that includes Open Cloud, Open Data, Open Innovation, Open Hardware, Open Standards, and on and on and on. I make this case in THE OPEN SOURCE EVERYTHING MANIFESTO: Transparency Truth & Trust just released 5 June. The book page with free stuff is http://tinyurl.com/OSE-Steele.

Second, MBAs are still not taught the art and science of decision-support or intelligence. Just as lawyers do not graduate from law school knowing how to be lawyers, only how to take tests about the law, so also are MBAs reaching the real-world without a grasp of true cost economics, ecologies of energy, water, and other inter-operable resources, or the craft of intelligence. They know how to deal with information that is presented to them, but they have no clue how to leverage crowd-sourcing (intellectual) or funding, no clue how to demand external research in 183 languages, focused on core information that is not in the 2% of the Internet that Google indexes, etc.

What is really happening here is that a couple of centuries of information asymmetries and unaccountable corruption are being flushed out by the Internet and the emergence of Blessed Unrest. It is no longer possible to get away with screwing the many for the benefit of the few, and the sooner MBA's "get" that real profit can only be found in sustainable processes that create a prosperous world at peace, the sooner they might actually be worth something to the public. IMHO.

Bob's picture

Free software might be the foundation of your computing environment. Any contribution back to that shows a level of appreciation to all those who contributed before you. An open computing environment became possible through the pioneering efforts of Richard Stallman. If you, for example, use gcc to develop your program, it is only fitting and proper that you altruistically give something back in the hope that it will be useful to others - just like gcc was helpful to you. Otherwise, don't use free software and stay locked in the world of proprietary code.

Robert Steele's picture

Yes, but go further. Go all in. Every resource penny, second, or thought, should be going not just to open software,but also to open hardware, open cloud, open standards, etcetera.