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Firm Strategies for Open Standards,Open Source, and Open Innovation
Joel Westwww.JoelWest.org/openblog
Designing Cyberinfrastructure for Collaboration and InnovationNational Academies, Washington, DC, January 29, 2007
Lens: A Firm’s Business Model
Firms need a business model to support innovation:
Value creation
Value capture
Value network
Openness is a tension of value capture vs. value creation across value network
Component
Complements
Systems AdoptionTechnology
Integrator Users
Complement Provider
Innovator
Component
Component Rival
Typical IT Value Networkaka “business ecosystem”
Contrasting 3 “Open” Strategies
Open standards
Open source
Open innovation
When firms are involved, these are neither fully open nor fully proprietary
Open Standards
Two ways to measure openness
Process opennessOpen meetings, transparent voting …
But firms steer standards to overlap IP
Market outcomesBuyers want multivendor competition
Hope for lower prices, avoid lock-in rents
Standards Rarely 100% Open
Standardization must be paid forSubsidy by SSO or by participants
Various ways to capture value
Increasing conflict over IPR & standardsFirms jointly maximize creating vs. capturing value (Simcoe 2006)
Policies starting to fail (e.g. RAND)
Open Source
Unpack “open source” to 3 dimensions:
Intellectual property policy
Virtual distributed collaboration
Community governanceConsiderable variance: community, consortia, sponsored; also gated
Role of Firms in Open Source
Firm resources majority of key projectsSome sponsor & control OSS, using it as price discrimination
Others contributed to produce shared goods, capturing value in other ways
Transparency is easy
Surrendering control is hard
What’s “Open” About OI?
Innovation spanning firm boundaries
Not about shared public goodsValue capture motive is explicit
Share value creation within value network
Provides for new forms of shared R&D
Open Innovation: antonym see vertical integration
What Do These “Open” Share?
Collaboration in providing shared outputMay be a complex system sold a la carte
Often firms “competing on a common platform” (O’Mahony 2005)
Not necessarily a public good
Openness aligns firm interestsProvides external check on opportunism?
Openness Attracts Participation
Brings in potential contributors
Adopters/users
Complementors & rest of network
OSS licenses are existence proofIP license provides a credible commitment
“Open” Infrastructure
Open is best choice for commodity, non-appropriable technologies
Shared implementations reduce redundant investment
How do you partition it?One firm’s infrastructure is another’s core business
Let’s Not Ignore the “P” Word
Open is not just about public goodsProfit is without honor (except to owners)
Open parts allow selling closed partsSometimes cross-subsidies less obvious
IBM Global Services welcomes complexity
Participation is market signal
Firm Strategies for Open Standards,Open Source, and Open Innovation
Joel Westwww.JoelWest.org/openblog
Designing Cyberinfrastructure for Collaboration and InnovationNational Academies, Washington, DC, January 29, 2007