In the last few years, we've seen a proliferation of “open” business books like Wikinomics and The Starfish and the Spider. When every management bestseller is piled high on the clearance table a few years after its debut, it's hard not to wonder if ideas like open innovation, transparency, and meritocracy are just the latest business trends in a series of soon-retired ideas. Is “the open source way” made to stick?
Tony O'Driscoll: Like any trend that gains currency in popular press, it is probably fair to say that the open source way is not the silver bullet some would suggest that it can be. With any volunteer-based social production mechanism, the challenges of building critical mass within the community and maintaining the passion within the community over time is something that traditional firms often underestimate. When you move from command and control to orchestration and coordination, most of the governance models and power bases that worked within the hierarchy are precisely the wrong modus operandi to enable the open source way. So from one perspective, just saying that open source is better is insufficient. Any system that extracts value from the market requires effort and input. The issue with the open source way is that the structure, power base, governance, incentives, (and the list goes on...) are largely orthogonal to how traditional firms operate.
On the other side of the equation, there are some places where traditional hierarchical structures, process, and governance models just make sense. If we think about it functionally, I can easily envision how Research and Development, Engineering, Marketing and Communications could benefit from applying an open source approach, but I am not sure I would want Finance and Accounting adopting an open source way.
Similarly just as there are economies of scale within a bureaucracy, I believe there are economies of scale of a different kind within an open source community. The paradox here appears to be that for large complex projects that require rapid innovation and updates, openness seems to work very well. For smaller projects focused on developing a specific interface layer or application, it appears to me that the traditional project management approach might have more efficiencies.
Tony O'Driscoll is a Professor of the Practice at Duke University’s Fuqua School of Business where he also serves as Executive Director of Fuqua’s Center for IT and Media, a research center dedicated to understanding the strategic, structural, operational, and business model issues associated with these vibrant and volatile sectors. Tony was a founding member of IBM Global Service’s Strategy and Change consulting practice, where he consulted with business leaders around the world on how to best leverage technology to create sustainable competitive advantage in an increasingly global, networked, and knowledge-enabled economy.
Next time: Tony discusses how management is coping with the shift toward open business practices.