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Firm Strategies for Open Standards, Open Source, and Open Innovation. Joel West www.JoelWest.org/openblog Designing Cyberinfrastructure for Collaboration and Innovation National Academies, Washington, DC, January 29, 2007. Lens: A Firm’s Business Model.

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firm strategies for open standards open source and open innovation

Firm Strategies for Open Standards,Open Source, and Open Innovation

Joel West

www.JoelWest.org/openblog

Designing Cyberinfrastructure for Collaboration and InnovationNational Academies, Washington, DC, January 29, 2007

lens a firm s business model
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
typical it value network
Typical IT Value Network

aka “business ecosystem”

Innovator

Integrator

Users

Component

Systems

Adoption

Technology

Complements

Component

Component Rival

Complement Provider

contrasting 3 open strategies
Contrasting 3 “Open” Strategies
  • Open standards
  • Open source
  • Open innovation

When firms are involved, these are neither fully open nor fully proprietary

open standards
Open Standards

Two ways to measure openness

  • Process openness
    • Open meetings, transparent voting …
    • But firms steer standards to overlap IP
  • Market outcomes
    • Buyers want multivendor competition
    • Hope for lower prices, avoid lock-in rents
standards rarely 100 open
Standards Rarely 100% Open
  • Standardization must be paid for
    • Subsidy by SSO or by participants
    • Various ways to capture value
  • Increasing conflict over IPR & standards
    • Firms jointly maximize creating vs. capturing value (Simcoe 2006)
    • Policies starting to fail (e.g. RAND)
open source
Open Source

Unpack “open source” to 3 dimensions:

  • Intellectual property policy
  • Virtual distributed collaboration
  • Community governance
    • Considerable variance: community, consortia, sponsored; also gated
role of firms in open source
Role of Firms in Open Source
  • Firm resources majority of key projects
    • Some 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
What’s “Open” About OI?

Open Innovation: antonym see vertical integration

  • Innovation spanning firm boundaries
  • Not about shared public goods
    • Value capture motive is explicit
    • Share value creation within value network
    • Provides for new forms of shared R&D
what do these open share
What Do These “Open” Share?
  • Collaboration in providing shared output
    • May 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 interests
    • Provides external check on opportunism?
openness attracts participation
Openness Attracts Participation

Brings in potential contributors

  • Adopters/users
  • Complementors & rest of network
  • OSS licenses are existence proof
    • IP license provides a credible commitment
open infrastructure
“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
Let’s Not Ignore the “P” Word
  • Open is not just about public goods
    • Profit is without honor (except to owners)
  • Open parts allow selling closed parts
    • Sometimes cross-subsidies less obvious
      • IBM Global Services welcomes complexity
    • Participation is market signal
firm strategies for open standards open source and open innovation14

Firm Strategies for Open Standards,Open Source, and Open Innovation

Joel West

www.JoelWest.org/openblog

Designing Cyberinfrastructure for Collaboration and InnovationNational Academies, Washington, DC, January 29, 2007