Beyond Budgeting Case Study: Linux
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Beyond Budgeting Case Study: Linux, download of updated version available at http://beyondbudgeting.net, contains information of the management model of linux and some information of the Linux history

Beyond Budgeting Case Study: Linux, download of updated version available at http://beyondbudgeting.net, contains information of the management model of linux and some information of the Linux history

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  • 1. The Linux Bazaar International Center for Outperformance Page 1
  • 2. quot;The centralized mindset is deeply entrenched. When people see patterns and structures, they instinctively assume centralized causes or centralized control. They often see leaders and seeds where none exist. When something happens, they assume that one individual agent must be responsible.quot; - Mitchel Resnick, Turtles, Termites, and Traffic Jams Content The “humble dictator” and his empire...............................................................................................................3 The “Cathedral” and the “Bazaar”.....................................................................................................................4 “Facebook Generation” vs. the “Fortune 500”...................................................................................................5 Milestones of the Linux Community..................................................................................................................6 Management practices of the Linux bazaar listed by Beyond-Budgeting-Principles.........................................8 Other management practices within the Linux Community.............................................................................14 Conclusion......................................................................................................................................................14 Resources.......................................................................................................................................................15 License...........................................................................................................................................................16 Version 1.1: May 2009 Page 2
  • 3. The “humble dictator” and his empire His nickname is the “humble dictator”, but he “reigns” his manifold “empire” just as in 1991 when it started an amazing worldwide success story. His management style can be best described by “I try to manage by not making any decisions, but to let things go their own way. So you get the best results.” (In this manner the “humble dictator” failed within his first tayloristic management position). Being today an icon of the open source movement, his “empire” is feared today by main competitor Microsoft and includes a flexible network of several 100.000s volunteer software developers and engineers, forming the world's biggest community project mankind has ever created. Despite of all, it was never intended to make any profit, but as his own biography titles “Just for Fun”. His product, despite having an “official” version, is today used by over 100 billion people directly e.g. in cell phones, TiVo or Motorola Razr and indirectly by more than a trillion of people browsing Google, Yahoo or other trillions of web pages. Even the NASA brought his product into space. With hardware and services related to his product world-class organizations like IBM, Motorola, Nokia, Phillips or Sony make trillions of US$ each year. Recently Jeff Howe named the way the product is created “Crowdsourcing” (2008, 2006), Yoshai Benkler called it “Peer Production” (2002), James Surowiecki titled it “The Wisdom of the Crowds” (2004), whereas computer expert Eric S. Raymond even talked in 1997 of his famous “bazaar” method of software development contrary of the “cathedral” method of software development. The philosophy behind this significant achievement was quiet simple. The “information” behind this product or better the software code should be free and freely to anybody to make modification which should also be in return be made free and freely again. This philosophy is today better known as the open source philosophy using the General Public License (GPL) by Richard Stallmann. Today his product is a standard open software tool of the LAMP family. As you have may guessed it the L stands for Linux, the “humble dictator” I am talking about is no more less than Linus Torvalds. By the way, the other three parts of the modern open source software toolkit are Apache (A), MySQL (M) and PHP (P). Page 3
  • 4. The “Cathedral” and the “Bazaar” Eric S. Raymond's famous essay “The Cathedral and the Bazaar” published in 1998 (presented in 1997) made me think. The cathedral method of software development is best metaphored by traditional-hierarchic- tayloristic top-down management and planning, implemented by specialized teams and structured around schedules. As Kuwabara points out: “Efficiency is the motto of the Cathedral. It is a sober picture of rational organization under linear management, of a tireless watchmaker fitting gears and pins one by one as he has for years and years.” No one wonders, because Microsoft is today the prime example for a “Cathedral”. As Kuwabara sums up: “On the other hand is the Bazaar model of the Linux project, with its decentralized development driven by the whims of volunteer hackers and little else. In contrast to the serene isolation of the cathedral from the outside, the bazaar is the clamor itself. Anyone is welcome - the more people, the louder the clamor, the better it is. It is a community by the people and for the people, a community for all to share and nurture.”quot;The Linux world behaves in many respects like a free market or an ecology, a collection of selfish agents attempting to maximize utility which in the process produces a self-correcting spontaneous order more elaborate and efficient than any amount of central planning could have achieved.quot;. Further central principles of the “Bazaar”that Raymond identifies are flexibility, parallel development, peer review, and feedback loops. If the “Cathedral” is the ambivalent to Taylorism, may the “Bazaar” the ambivalent to Beyond Budgeting? May even the Linux Community a not yet by the BBRT identified true Beyond-Budgeting-Pioneer? The answer to these two questions is the aim of this publication. It is clear, that the principles “Rewards” and “Resources” cannot be applied to the Linux bazaar, because of its non-monetary open source model. But what about the other 10 Beyond-Budgeting Principles and further interesting approaches managing the Linux way? Page 4
  • 5. “Facebook Generation” vs. the “Fortune 500” Recently Gary Hamel blogged at Wall Street Journal Online an interesting article in which he described like Raymonds' the underlaying principles of the web entitled the “Facebook Generation” and names their counterparts, the command-and-control management model of the large corporations as the “Fortune 500”: The principles of the “Facebook Generation” are: “1. All ideas compete on an equal footing. 2. Contribution counts for more than credentials. 3. Hierarchies are natural, not prescribed. 4. Leaders serve rather than preside1. 5. Tasks are chosen, not assigned. 6. Groups are self-defining and -organizing. 7. Resources get attracted, not allocated. 8. Power comes from sharing information, not hoarding it. 9. Opinions compound and decisions are peer-reviewed. 10. Users can veto most policy decisions. 11. Intrinsic rewards matter most. 12. Hackers are heroes.” (Gary Hamel) 1 See the works of Max de Pree for “servant leadership” Page 5
  • 6. Milestones of the Linux Community Linux success story started in summer 1991 when Linus Torvalds made his first post on the on the Internet newsgroup comp.os.minix: “Hello everybody out there using minix - I'm doing a (free) operating system (just a hobby, won't be big and professional like gnu) for 386(486) AT clones. This has been brewing since April, and is starting to get ready. I'd like any feedback on things people like/dislike in minix, as my OS resembles it somewhat (same physical layout of the file-system (due to practical reasons) among other things) [...] I'd like to know what features most people would want. Any suggestions are welcome, but I won't promise I'll implement them :-) Linus (torvalds@kruuna.helsinki.fi) PS. Yes - it's free of any minix code, and it has a multi-threaded fs. It is NOT portable (uses 386 task switching etc), and it probably never will support anything other than AT-hard disks, as that's all I have :-(“ Then following this post, Linus Torvalds distributed on the 5 th October 1991 he second version of his operating system “Linux” :“As I mentioned a month ago, I'm working on a free version of a Minix-look-alike for AT-386 computers. It has finally reached the stage where it's even usable (though may not be, depending on what you want), and I am willing to put out the sources for wider distribution [...] This is a program for hackers by a hacker. I've enjoyed doing it, and somebody might enjoy looking at it and even modifying it for their own needs. It is still small enough to understand, use and modify, and I'm looking forward to any comments you might have. I'm also interested in hearing from anybody who has written any of the utilities/library functions for minix. If your efforts are freely distributable (under copyright or even public domain), I'd like to hear from you, so I can add them to the system.quot; Five out of the first ten people that downloaded “Linux” sent back improvements to include into the software code. At the end of 1991 the Linux community comprised about 100 software developers. Within the Linux community there has never existed a centralized organization to mediate communication between Torvalds and the thousands of contributors, nor are there project teams with prescribed tasks and responsibilities, to which individual contributors are specifically assigned. Instead, from the beginning, it has been left to each person to decide what to work on at the moment, even at the potential risk of coordination difficulties. If two or more software engineers work on a similar or the same project, both versions are accepted and finally the end-customer decides which is the better one. Even today there is no “official” version of Linux. Torvalds claims that there is his version, which is usually referred to as the “official” version, and there are the versions of other community members. Page 6
  • 7. Early Central Milestones of the Linux Community include: • January 1992: Torvalds changes the original “Copyright” license to the “Copyleft” General Public License (GPL) from Richard Stallmann. Under the new GPL, the software code can be used for commercial and non -commercial activities with the exception, that the new generated software code has to made public again. • 1995: first commercial Linux distributions e.g. Red Hat Linux, VA Linux and SuSe Linux are available with accompanying services • 1995: the Linux Trademark was transferred to Linux International (and Linus Torvalds) • 1996: Linus Torvalds leaves the University of Helsinki where he started Linux and moved to the United States • 1998: Sun Microsystems joins Linux International to support Linux on Sun servers • 1998: IBM supports Linux's Apache Web server • 1998: Oracle announces that Oracle Databases will support the Linux operating system • 1998: Corporate America decides to use Linux, not because of the monetary issues, but because of the relative strengths of the Linux system compared to Windows NT and Unix • 1999: Red Hat Linux made its IPO • 1999: VA Linux made its IPO Page 7
  • 8. Management practices of the Linux bazaar listed by Beyond-Budgeting- Principles Customers Linux's customer focus can be best described in the words of Linus Torvalds: “Success is linked to quality and the ability to give people what they want.” Further Eric S. Raymond considers the software co- development with customers and the listening to the voice of the customer as an essential part of the open source software philosophy. Very interesting to note is that when Linux started to be used within Corporate America, old-fashioned tayloristic IT departments decided to use Linux not because of the lower costs, but due to its relative better technical features, which were e.g. stability, flexibility, better performance and the open software code relative to main competitor Microsoft (Windows NT) and several Unix derivatives. At that time especially Linux ability to not be a niche product, e.g. special industry products, advanced its popularity (at that time nearly all mainframe computers and operating systems were mostly industry focused e.g. banking). Further the “David vs. Goliath” mentality also fostered Linux worldwide success story, represented by the open software movement against Microsoft. Linux Torvalds himself cannot understand this mentality of triviality of Linux and Microsoft. For him, Linux is “a living possibility to share technology, knowledge, wealth and fun in a way, that commercialism has never known.” For him open source meant more to improve the world and to have fun. Organization Linux has neither an organizational chart, nor a formal and central organization to coordinate efforts or central authority vested with decision-making power. Its organizational design may best be described as a loose network of 100.000s of independent software developers and engineers, teaming up or working alone. Page 8
  • 9. Autonomy Like Terri Kelly (W.L Gore & Associates), Ricardo Semler (Semco), Dennis Bakke (AES), Roger Sant (AES), Herb Kelleher (Southwest Airlines), Richard Branson (Virgin), Klaus Kobjoll (Schindlerhof), Erich Harsch (dm drogeriemarkt), Max de Pree (Herman Miller), or Vineet Nayar (HCL Technologies), Linus Torvalds is a classical Un-CEO, who's tasks is not to make decisions, but to enable others to act intelligent in the sense of the entire organization. As Gary Hamel sums it up: “Torvalds has no formal power. He wasn’t appointed by a board, and has no direct reports. Torvalds’ power is granted from below, unbuttressed by formal positions and titles. His influence rests on his ability to recognise, balance, and serve the interests of the Linux development community. Every developer has the freedom to ignore Torvalds’ views on the evolution of Linux and “fork the code.” In this sense, Torvalds’ power is always open to challenge. As a servant leader, Torvalds’ power is also constrained by the necessity for consultation and transparency – he can’t afford the luxury of making capricious decisions, and must extend “due process” to every well-intentioned idea. The moment Torvalds stops adding value, or starts making parochial, self-serving decisions, his power will start to erode. Companies everywhere should be looking for ways to apply this principle of “reverse accountability” in their own organisations – as it may be the best possible insurance against the fast-rising costs of organisational maladaptation.” Torvalds, the undisputed leader of the Linux project, oversees the project as a whole, keeps track of major developments and reviews numerous patches of code submitted by his developers. When disputes erupt, and no immediate consensus avails, there exists within the Linux community no standard procedure to reach a final decision. Linus Torvalds might consult particular maintainers or ask the community for feedback, but there is no formal vote or clear balance of power. As Kuwabara points out: “[Further] common practice in the Linux project dictates that new patches of code are first submitted to particular maintainers for approval before they are sent to Torvalds. From the chance events that found the early volunteers of the Linux project and hence shaped its initial condition, the Linux community has locked itself into increasingly coherent and stable patterns of interaction around maintainers. In effect, Torvalds has found a self-organizing system of collaboration and spontaneous order around himself without consciously intending to build such a system.” Torvalds himself describes his leadership style as: “Humble dictator? No, I am just lazy. I try to manage by not making any decisions, but to let things go their own way. So you get the best results.” Further he adds: “I learned very early, that you lead people the best and most effective way by not making any directions, but simply let them realize their imaginations. The best leaders also know when they are wrong and than are able to retreat. And the best leaders enable others to make decisions for them.” Torvalds' role within the Linux community is also described by himself as a adjudicator, who adjusts controversies about the kernel of the operation system. Even today Torvalds manages several 100.000s software developers and engineers Page 9
  • 10. as in October 1991 from his own room and programming: “Instead of delegating work, I wait for the people to come to me and take over voluntarily.” Linux is said to have a core team or so called “Inner Circle”, but in fact, opinions range widely about this issue: quot;There are a number of well trusted individuals like Alan Cox who could be said to exist in the inner ● circle. I'm not sure if there is a defined inner circle or not. Most likely it's a group of individuals who know the kernel inside and out and have similar goals in mind.quot; quot;[It] is a small and well-defined group: Linus [Torvalds], Maddog Hall, Alan Cox, and somewhere ● between 6 and 12 others (varying at times).quot; quot;Watch the linux-kernel mailing list. The quot;Inner Circlequot; becomes very obvious. People go in and out of ● the Circle, so a list probably isn't possible [...] I would say it includes may be 2 dozen people.quot; quot;Within the Linux world, there's no strictly defined core team, not even a loose one[...] You can ● probably say that there are 100 very active kernel folks [...] but that still leaves a rather large gray area.quot; Steven Weber describes the “Inner Circle” as group of co-developers with an own responsibility for ● subsystems or components. These co-developers who are also referred to as “lieutenants” delegate tasks to so called “area-owners” or “maintainers” who have a specific area of responsibility. Torvalds role is to manage disagreements that cannot to be solved within the Linux Community at the periphery. The actual decision hierarchy at Linux is informal. But there exists no document or organizational chart that lists the members of the “inner Circle”, whether its importance is recognized by the Linux community. Linus Torvalds may have the power to reject a contributor's work, but the person is free to launch his or hers own open source project and to attract contributors for it (this is referred to “folk the code”) The inconsistency and the ambiguity of these statements, including the recent quote from Gary Hamel (published in LabNotes 8/2008), bear testimony to the fact that, despite the universal recognition of its presence and stature in the project, the Inner Circle is neither handpicked specifically by Torvalds nor clearly defined by the Linux community. It is doubtfully a group that formed naturally e.g. like the natural leadership within the “Lattice Organization” of W.L. Gore & Associates, or the first version of the Oticon “Spaghetti Organization” (1991 – 1995), or within the Google “Borg” without external intervention but simply by virtue of their involvement and expertise acknowledged by the Linux community. The single software developers and engineers are fully autonomous in their decision on how they would like to contribute to the Linux project. Page 10
  • 11. Responsibility By definition, all Linux community members are leaders and own their own responsibility for their work. Values The main values of the Linux community can be best described by Linus Torvalds own three “golden rules”: • Behave to others as you self likes them to behave with you • Be proud of what you are doing • Have fun Further the so-called “Hacker Ethic” may be a good guideline, or better, a set of norms and beliefs to describe the fundamental value system of the open source community: - All information should be free. - Mistrust authority: reject hierarchies and promote decentralization. - Practice is better than theory - always yield to the Hands-On Imperative. - You can create art and beauty on a computer. - Hackers should be judged based only on merit, i.e. hacking skills. - Computers can change your life for the better. Kuwabara points out: “It is debatable whether their particular work habits preceded the Hacker Ethic, or vice versa, but regardless, intellectual freedom has become an immensely important value, morally and pragmatically, for hackers. It is understandable why hackers and programmers so deeply resent the growing proprietary control that place legal restrictions on source codes and disrupt hacker communities through rigid division of labor and specialization under corporate management. The Linux project is therefore not simply a hobby for hackers. The Linux project also represents an attempt at reaffirming the hacker identity and expressing a legitimate concern at the brutality of capitalism that has undermined the practices of sharing and helping. And in doing so, hackers form a distinct culture of their own, a culture sustained by the Hacker Ethic. [...] Particularly, the Hacker Ethic prescribes conducts of sharing and cooperating, enforcing the norm of reciprocity and providing a meaningful context for the reputation game.” Page 11
  • 12. Transparency Transparency is created within the Linux community by the open software code itself, further several online forums and mailing lists share information to the peers. Planning The Linux community itself has neither central planning, nor a vision nor a long-term fixed plan:quot;That way I can more easily deal with anything new that comes up without having pre-conceptions of how I should deal with it. My only long-range plan has been and still is just the very general plan of making Linux better.quot; (Linus Torvalds). “As I never planned , that Linux has a life outside my computer, I have never planned to be its head. That just happened.” (Linus Torvalds). Rewards Due to the fact, that the Linux community is itself a non-monetary movement, the principle awards cannot be considered in this case. Many publications, incl. Torvalds autobiography list the following non-monetary motivational factors, why people give even up their private lives to contribute to the Linux community: • passion for programming • being proud to be part of an international community project – the world's largest community project ever created by mankind • to create the best operating system ever and making it free and freely available to everyone (the work of single members is honored within a Credit List or History File) • recognition and respect by peers within the Linux community • to impress future employers who mine the Credit Lists and History Files to find new talents With reference to motivation, Linus Torvalds adds further: “It is proved that people achieve the most when they are driven by passion. The open source model gives people the chance to live their passion. And to have fun. And to work with the best programmers of the world, and not few, that are hired by chance at the same company. Open source developers strive to gain the respect by their peers. And that must be highly motivated.” Page 12
  • 13. Kuwabara sums up: “But methodological issues aside, the responses nonetheless suggest a rich diversity of motivations. Every respondent identified not with a single motivation, but a list of motivations - again reminding us the inadequacy of a single motivation to explain the Linux project. Of 32 respondents, all reported personal satisfaction and enjoyment as a primary motivation for their involvement in the Linux project. But as Raul Miller elaborates, quot;Fun means that I can spend my time doing real work, not trying to work around someone else's bugs that I can't address.quot; In other words, the pragmatic value of Linux, i.e. the fact that Linux allows the user to customize freely, enters one's utility equation. Enjoyment is tightly coupled and associated with the intellectual freedom Linux afford to its users.” Goals and Controls The Linux community itself has no traditional relative goals like e.g. used at Svenska Handelsbanken, but Linux as a product is since its beginning placed relative to its main competitive products which were at first Minix, than Unix and today Windows, furthermore no fixed and top-down targets do exist. Resources This principle cannot be considered in the case of Linux due to the its non-monetary purpose. Coordination Within the Linux community there is no neither a central nor any long-term planning or nor annually planning cycles. Moreover coordination takes place by continuously by self-organizing of the single community members. Page 13
  • 14. Other management practices within the Linux Community No job descriptions or work directions: quot;In developing Linux, you have complete freedom to do whatever you feel like doing. There's no specification anywhere of what the Linux kernel has to end up doing, and as such there is no requirement for anyone to do anything they are not interested in.quot; (Linus Torvalds) quot;If there is something that needs to be done, one of us simply steps forward and does it. Given the entire community, he might not be the absolute best person to do the task technically, but if we see that he is doing the job well, we continue to send him patches and assure him credit for his efforts because we know that he is a volunteer like the rest of us.quot; (unknown) Within the Linux community self-organizing community members substitute traditional job descriptions and work directions. In a self-organizing job sculpting manner, people match their own talents and interests to volunteer tasks. Peer review: “Peer review is essential. Given enough co-developers, problems will be characterized quickly and the fix obvious to someone: quot;Given enough eyeballs, all bugs are shallow.quot;” (Kuwabara; Raymond) Feedback: “Feedback is key to rapid, effective code improvement and debugging. Release early and often. Treat your customers as co-developers, and listen to their feedback. Treat your beta testers as your most valuable resource, and they will become your valuable resource.” (Kuwabara; Raymond) Conclusion The bazaar model for software development as we have seen it at the Linux Community matches 10 Beyond-Budgeting-Principles and is therefore considered to be a Beyond Budgeting Pioneer, whereas it is to note, that the remaining two ones (rewards & resources) cannot be considered within the Linux community because of the non-monetary approach. Among other pioneering companies like e.g. Google, W.L Gore & Associates, AES Corp, Svenska Handelsbanken, Ahlsell, Toyota (about 300.000 employees) it may be the biggest Beyond-Budgeting-Pioneer ever discovered. Since 1991 the Linux community has maintained the alternative model over 17 years. Due to its consistency with the Beyond-Budgeting-Mindset it can be assumed that if financial resources would be used within the Linux community, there would be no centralized budgeting processes. Page 14
  • 15. Furthermore it can be concluded that all open source communities following the bazaar approach can be seen as Beyond Budgeting pioneers (e.g. Wikipedia) . Resources • Eric S. Raymond, quot;The Cathedral and the Bazaar,quot; First Monday, volume 3, nummer 3 (March 1998) • Eric S. Raymond, quot;The Cathedral & the Bazaar. Musing on Linux and open source by an accidental revolutionaryquot;, O'Reilly Media, 2001 • Kuwabara, Ko “Linux: A Bazaar at the Edge of Chaos” First Monday, volume 5, number 3 (March 2000) • Tapcsott, Dan; Williams, Anthony D: “Wikinomics. How Mass Collaboration Changes Everything, Portfolio, 2006 • Surowieki, James: “The Wisdom of the Crowds”, Doubleday, 2004 • Torvalds, Linus: “Just for Fun – The Story of the Accidental Revolution”, HarperCollins, 2001 (latest German version used, quotes may be slightly different to English edition) • Pflaeging, Niels: “Fuehren mit flexiblen Zielen”, Campus, 2008 • Hamel, Gary: “Moving management on-line (part two)” in LabNotes 8 / 2008 • Hamel, Gary: “The future of Management”, Harvard Business School Press, 2007 • Hamel, Gary: “The Facebook Generation vs. the Fortune 500”, Gary Hamel's Management 2.0 Blog at WSJ Online: http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs- the-fortune-500/ • Howe, Jeff: “Crowdsourcing. Why the power of the crowd is driving the future of business”, Random House Inc, 2008 • Weber, Steven: “The success of open source”, Harvard University Press, 2004 • Benkler; Yochai: “Coase’s Penguin, or, Linux and The Nature of the Firm”, in the Yale Law Journal, vol. 112, 2002 • Benkler, Yoshai: “The wealth of networks. How social production transforms markets and freedom”, Yale University Press, 2006 • Front Cover Picture: Creative Commons BY-NC-ND: BY Titannet: http://www.flickr.com/photos/titanet/325087588/ Page 15
  • 16. License This paper except the logos and the front cover picture is licensed under a Creative Commons BY-SA License. Credit: quot;International Center for Outperformance (www.intco.org)quot; within the reference list Page 16