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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
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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
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Component
Complements
Systems AdoptionTechnology
Integrator Users
Complement Provider
Innovator
Component
Component Rival
Typical IT Value Networkaka “business ecosystem”
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Contrasting 3 “Open” Strategies
Open standards
Open source
Open innovation
When firms are involved, these are neither fully open nor fully proprietary
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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
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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)
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Open Source
Unpack “open source” to 3 dimensions:
Intellectual property policy
Virtual distributed collaboration
Community governanceConsiderable variance: community, consortia, sponsored; also gated
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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
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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
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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?
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Openness Attracts Participation
Brings in potential contributors
Adopters/users
Complementors & rest of network
OSS licenses are existence proofIP license provides a credible commitment
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“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
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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
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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