This is not about
software. But open source as an emerging
business tool.
“Steed, based in Shenzhen is one of the world’s biggest manufacturer
of open-source hardware. When a maker
asks Steed to build a circuit board, the firm keeps a copy of the design which
can then be used without charge by other customers. Steeed is not alone so much
so that this form of manufacturing is dubbed ‘open-source manufacturing’ there”
– Economist, 18
Jan. 2014
While the
software movement branded ‘open source’, the idea of the RFC conceived (1969)
when the internet was being design, formed it.
Now, after more than 50 years, begun as a process then applied by
software engineers and gradually by progressives in businesses, it can now be
codified into a tool for broader business use.
Egged on by the new-ish internet economy, it offers disruptive
opportunities for the new and old industries alike.
In an RFC (Request For Comments), specifications of the internet
were conceived, written up and circulated, requesting for comments. The final, say, domain name system was
invariable the result of numerous engineers’ input globally.
This post posits
that it has become an emerging cog of internet commerce, albeit in its infancy.
What can a company use the open source model for?
It can work for
just about anything to do with design; shoes, cars, devices, etc. And through design, indirectly for marketing,
sales and even tracking trends. The
latter uniquely can be done in real-time over long periods, something
traditional methods can’t. It can double
up as a means for finding top talent.
Content, digital
products and services are a natural for the open source model. Through the developmental process it can lead
to market development, penetration and expansion. Likewise, physical products can too by
wrapping things digital like information or software around it. 3D printer manufacturers can deploy this.
Because the open source model is built
around communities, in this case, of peers, it can provide powerful insights by
tapping into this crowd, made up mostly of enthusiasts from the industry. Think market intelligence, think branding. And identifying potential high performance
staff.
It’s use as a
competitive tool, say to introduce a new product in a crowded market, is covered
in the 4th post. Its
impactful for things new.
Business
operations can benefit if applied correctly as this example shows.
“Contributing directly to the open source community has cut
maintenance costs at Sony Mobile and allowed it to speed up some product
releases by two to four weeks, a competitive advantage that can translate to
millions of dollars in new revenue.”
- the Wall Street Journal, 9 may 2014
Specific
examples and more ideas are suggested throughout these series of posts.
As an aside, note
that many business objectives (above) are achieved indirectly whence once business is all about being direct. Like native ads which is not in-your-face unlike
traditional media advertisements.
You may have noticed this indirect technique used by many new-economy
firms.
This first post is about what it can be used for, the
second explains the model, the third why it works, the fourth suggest when it
can be used and the last explains how to use it.
As a business
model, it has been used by a furniture manufacturer to reduce inventory, a shoe
shop for customer research, a software firm for business expansion and a niche
car manufacturer as its core business model. Recently
Tesla Motors also announced it is open sourcing all its designs. Here it is to develop an industry more
quickly.
It is used for
sales, marketing, R&D, product development, market research, customer
service.
It has been used to expand a business globally, to develop a brand. Cleverly applied, it can even be used for
long term business development and to improve productivity.
It is as
applicable to the software industry as it is to architects or consumer
businesses. It has even been used to
improve yields in mining. It is useable
by the large but is especially impactful for small businesses or those trying
to get into crowded spaces.
It is not only
used by tech firms but the traditional with the internet the common factor to
reach the peer crowd.
It has even
influenced the current generation of tech startups.
Lean startups operate in a constant feedback loop that involves building
something, measuring how users react, learning form the results then starting
all over again until they reach what is known as ‘product-market fit’. The lean startup is about continuously
improving an (online) offering. It involves
customer development (as opposed to product development) to get out of the
building and find out what people really needs.
Startups start with a ‘minimum viable product’ to gauge the audience’s
interest. They always test their
assumptions aiming for ‘validated learning’. And if their strategy doesn’t
work, they should ‘pivot’, in essence, throw in the towel and start again with
a different product. Sure, it’s used
conventionally but in lean startups, it is used to develop the core business,
that is, primary while traditional firms use on the side. It is the same process as the open source
model explained in the next post.
Firms using open
source for business today are the minority but that’s how mother innovation
does things. It will have an impact on
mainstream businesses. For software
though, it’s further down the curve, it’s in the process of remaking the
industry.
Summarising the benefits
With the caveat
that this model is not what we are used to, of managers not being able to exert
absolute control over the production process, it can if applied correctly for
the right application:
·
supplement skills a company
lacks
· help with R&D, designing,
product development and indirectly with marketing, brand building, sales and to
quicken adoption
·
develop better products by
involving customers as co-developers
·
potentially offer better
service since it can assist in customer support
·
reduce costs
·
be used for market penetration,
market expansion
·
be used to tap ideas, bring in
fresh perspective, tap opinions, gauge customer needs test an idea and thus market
research, customer survey and something difficult for traditional businesses to
execute – capturing real-time trends
·
improve innovations
How the open
source model achieves these are described in the next few posts.
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