Business Models, Open Collaboration, and Open Source Software Development
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The document discusses business models for open source software development. It begins with an introduction of the speaker and an overview of business models and open collaboration. It then discusses four common business models and how they relate to open source software. A key point is that open source developers provide innovation for businesses through their contributions. The document raises two questions for open source-enabled business models: why developers contribute long-term and why the quality is often high. It proposes that understanding developer motivation and open collaboration is important for businesses utilizing open source.
Business Models, Open Collaboration, and Open Source Software Development
- 1. Stefan Haefliger haefliger@city.ac.uk City Unrulyversity, June 1, 2016 www.cass.city.ac.uk Business Models, Open Collaboration, and Open Source Software Development
- 2. www.cass.city.ac.uk Agenda • Business models and FLOSS • The big question of motivation • Open collaboration • We are the innovation • Q&A www.cass.city.ac.uk
- 3. www.cass.city.ac.uk Hi, I’m Stefan • Currently prof in strategic management and innovation at Cass • Since 2001 research in Free and Open Source software development: Free Java, FOSDEM, interviewed dozens of hackers across Europe • Studied code reuse in FLOSS, community dynamics and motivation, and now open collaboration • With strategy colleagues at CASS: F1 research and business model typology: the businessmodelzoo.com • Swiss originally, worked in the US, Japan, Italy, Belgium • Passionate about meditation, art, and creativity
- 4. www.cass.city.ac.uk Models of Business • What is a business and its purpose? • What does strategy tell us about open source? • What is a business model? • The model of the customer interface in the mind of the designer of the business • Implementations may work out, - or fail!
- 5. www.cass.city.ac.uk 4 Types of Business Models Baden-Fuller, Giudici, Haefliger, Morgan, 2016 The company develops a product or standardised service and sells it to customers. The value proposition is transactional: to provide a product or standardised service that many customers will buy. The company engages with a customer about a problem the customer faces, and provides an integrated solution. The value proposition is relational: to tailor solutions to each customer. The company joins buyers and sellers in its online or physical marketplace. The value proposition is transactional: to facilitate exchange. The company provides different products or services to different customer groups. The value proposition is multi-sided: one customer group gets additional benefits from the other group’s transactions.
- 10. www.cass.city.ac.uk OSS and Business Models • Selling work for hire: your talent to TechCity firms • Sell solutions: RedHat, Acquia, etc. • Build a market: match talent and tech firms (pilot.co and others) • Build a multisided platform business model: connect but keep separate (Ad-supported or data sales on social networks, often one side free!)
- 11. www.cass.city.ac.uk Technology ≠ Business • “Platforms” are known in technology, economics, and business. • A platform technology is not the same as a platform business model! Consider e-commerce over the Internet and advertisement-enabled online search (Google) • Technology is all three: a product and an enabler and an input to business!
- 12. www.cass.city.ac.uk What is special with OSS? • Innovation by user developers gives the world great software and enables new business • User entrepreneurs set up shop with what they’ve developed • Developers help each other and contribute to business problems • “We are the product” also means: “We are the innovation!”
- 13. www.cass.city.ac.uk Two Questions for the OSS-enabled Business Model • Why? • Lerner and Tirole in 2001: “Why do highly skilled programmers give a way software for free?” • Stallman, the GNU and so forth only half the story • Why is FLOSS sustainable and (often) resulting in high quality and for the benefit of business? • How? • Who solves whose problems in OSSD today? • What are the patterns of open collaboration?
- 14. www.cass.city.ac.uk Open source software development • Two central questions remained unanswered after reading most or all that’s been written about developers’ motivations: • why do they keep developing over long periods of time (often after solving their own problems)? • why do they produce high quality if they do? • Why? von Krogh, Haefliger,Wallin, Spaeth 2012
- 15. www.cass.city.ac.uk Motivation by reward • Self-determination theory, since the 80ies, explains the different reasons that bring about human action • note that what is to be explained is action rather than inaction! • Extrinsic motivation if action is performed to obtain a separable outcome • Intrinsic motivation if joy or interest inherent in the action
- 16. www.cass.city.ac.uk Examples for extrinsic and intrinsic motivations Extrinsic Internalized extrinsic Intrinsic Salary Learning Fun Career Reputation Ideology Punishment Reciprocity Altruism
- 17. www.cass.city.ac.uk Motivation • What is missing?
- 18. www.cass.city.ac.uk A broader look at motivation • Long-term goals that may be in vain • Making sense of one’s life (narrative, character, learning) • Doing the right thing • Understanding quality • standards of excellence as shared in a community • community as defined by a social practice
- 19. www.cass.city.ac.uk What is a social practice? • Shared type of work: think care givers, architects, managers, software engineers, bankers etc. • Social practice defined as “a coherent and complex form of socially established cooperative human activity ... trying to achieve and extend the standards of excellence appropriate to and definitive of the activity” (after MacIntyre, 1981)
- 20. www.cass.city.ac.uk A social practice view of motivation Self-determination view Social practice view Output Product Good Incentive Reward Unity of life, moral obligation Interaction with peers and tasks Situational, next step, solution-oriented Developmental, sequential, quest-oriented Quality perception Use value Standards of excellence Time perspective Short- to mid-term Long-term, sense for the right time von Krogh, Haefliger,Wallin, Spaeth 2012
- 21. www.cass.city.ac.uk Open Collaboration • Private-collective innovation involves individual users, firm users, and firm producers • Problems revealed are incremental or path-creating • What is the inner working mechanism of open collaboration? Who solves whose problems? • How?
- 22. www.cass.city.ac.uk The setting: Open Stack Armisen et al., 2016
- 23. www.cass.city.ac.uk Data from Open Stack • Two years, 5018 problems that were either Blueprint or Bug • 196 individuals in 14 firm producers, 280k LOC, 12,298 revealed solutions • 163 independent users, 95 produced 55k LOC, 2,578 revealed solutions • 184 individuals in 110 firm users, 640k LOC, 7,605 revealed solutions Armisen et al., 2016
- 24. www.cass.city.ac.uk Who contributes what to Open Stack? Contributions of blueprints and bugs per actor (total amount) Armisen et al., 2016
- 25. www.cass.city.ac.uk Collaboration depends on who suggests the feature Armisen et al., 2016
- 26. www.cass.city.ac.uk Business Models and Open Collaboration • If “we are the innovation” then triadic business models that engage in open collaboration need to understand the social practice behind innovation • Because interaction is developmental, long-term • Because consumers are also suppliers • Because learning is an explicit part of the customer engagement and runs both ways