Is "Open Source" a viable business model?

Is "Open Source" a viable business model?

One of the benefits associated with the social media revolution has been the increased emphasis in sharing and collaboration. Wikipedia has developed into a global information resource through donations and a decentralised structure of volunteers giving up their free time to run it. Vast business empires have grown out what is basically offering free services. Social media giants such as Google, Facebook and YouTube have become dominant forces through launching platforms for the mass market and building in commercial applications for add-ons. And it’s not just limited to mainstream consumers - b2b applications such as LinkedIn, Linux and Sugar CRM have prospered in similar fashion.

It is the starfish against the spider parallel, as developed in the book from Rod Beckstrom and Ori Brafman “the unstoppable power of leaderless organisations”.

It is the concept of the starfish having a decentralized neural structure permitting regeneration whereby a spider-like organisation is fully centralized with a command and control centre. We are entering a new age of sharing, collaboration and as a result the proliferation of open-source, free to use platforms. This is great news for consumers, but is it a viable business model?

On the face of it, the likes of Google and Facebook would agree – but they are market leaders in their chosen areas. How sustainable is an “open and free” approach for smaller businesses trying to gain competitive advantage. And in a global recession how, viable is this approach when everyone is trying to gain share in declining markets?

Also if “leaderless” organisations are proving to be so successful, what does this say about companies needing better and more leaders to thrive? Here we go again with a Top-down Vs Bottom Up battle. The concept of Open Source vs Patent or Leaderless Vs Centralised may appear to be different but in reality they are very related and interdependent. The relationship can be summarized as the “open and free” approach vs “closed and controlled.”

Take DigitalMR as an example. Among other things, we develop software in-house for our online communities and our dilemma is: should we maintain the copyright and patents and use this to differentiate ourselves from other market research agencies or should we open it up for anyone to use and benefit from it?

And if this wasn’t enough of a dilemma, we also have to ask ourselves – if we do open up the software for everyone to use does it matter if our motivation is clearly commercial or altruistic? Will the answer to this question define the success of the applications made available? Is it possible to be altruistic and commercially successful? If a business makes an application “open source” for increased exposure and awareness will clients be tempted to pay for extra add-ons.

Being secretive, developing Intellectual Property in the form of patents and copyrights that Private Equity and Venture Capital firms see as assets, holding our cards close to our chest and COMPETING is the traditional option. Being open, sharing ideas, building on ideas, making friends, making I.P. open to everyone, based on COLLABORATION is developing as the “new media” option.

We like the direction the Open Business Council is taking. They want to become a hub for all aspects of Open Business including, but not limited to, Open Innovation, Open Communication, Open Research, Open Planning as well as Open Government and Open Data. They believe this approach leads to a “more efficient, ethical and sustainable business.”

But can we sustain our businesses this way? Clearly we believe the answer is yes – companies can share and still offer competitive advantage through their expertise and, perhaps most importantly their people. It is the application of open source systems and freely available information that is crucial. How companies assimilate what is freely available, integrate with their own expertise and customise offers to meet clients’ needs, will be a crucial factor for success in the digital age.

It’s worth remembering that without an open source, collaborative approach, the internet as we know it would have developed very differently. If Tim Berners-Lee, inventor of the World Wide Web, had decided to take a closed and controlled approach, then it’s unlikely I would be writing this blog post today.

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