Doing the Impossible: Managing Open Source Communities

Doing the Impossible:Managing Open Source CommunitiesDr. Matthias StürmerSenior Advisor, Ernst & YoungJune 7, 2011

Short Bio Matthias Stürmer ● Senior Advisor at Ernst & Young EMEIA Financial Services since 2010 ● Before at Swiss open source software provider Liip ● Dr. sc. ETH Zürich at the Chair of Strategic Management and Innovation of ETH Zürich, thesis on firm involvement in open source communities ● Business administration and computer science atErnst & Young University of BernBelpstrasse 233001 BernSwitzerland ● Founder and secretary of the Swiss Nationalmatthias.stuermer@ch.ey.com Parliamentarian Group for Digital SustainabilityMobile: +41 58 289 61 97 ● Member of the Board of Swiss Open Systems User Group /ch/open Matthias Stürmer, Ernst & Young

Agenda1. Forking today2. Motivation and the private-collective model of innovation3. Benefits and best practices of corporate community building4. Balancing act between openness and control5. Little surprise... Matthias Stürmer, Ernst & Young

Forking todayOpenOffice.org LibreOffice Matthias Stürmer, Ernst & Young

Forking today DrizzleMySQL MariaDB Matthias Stürmer, Ernst & Young

Forking todayCompiere Adempiere Matthias Stürmer, Ernst & Young

Forking todayNagios Icinga Matthias Stürmer, Ernst & Young

Forking today Are these all failed open source projects? Matthias Stürmer, Ernst & Young

Forking today No, the core team just didnt manage well its community. Forking is the community‘s Sword of Damocles. Matthias Stürmer, Ernst & Young

Like every country,every open source community is unique Matthias Stürmer, Ernst & Young

Motivation for individuals to contribute10 different reasons for individuals to contribute to open source software: Intrinsic Motivation: ● Ideology Can be enjoyment- ● Altruism or obligation-based incentives ● Kinship ● Fun Internalized Extrinsic Motivation: ● Reputation Can be non-monetary... ● Reciprocity ● Learning ● Own-use Source: G. F. von Krogh, Extrinsic Motivation: ● Career S. Haefliger, S. Spaeth, M. W. Wallin “Open Source ... or monetary incentives ● Pay Software: a Review of Motivations to Contribute” Matthias Stürmer, Ernst & Young

Firms adopting the open source model Building a firm-sponsored community byLevel 3 renouncing some of the projects control Revealing proprietary source code under anLevel 2 open source license → full control by the firm Integrating externally available openLevel 1 source software → open innovation Source: Matthias Stuermer 2009 PhD Thesis “How Firms Make Friends: Communities in Private-Collective Innovation” Matthias Stürmer, Ernst & Young

Motivation for firms to contribute7 different reasons for firms to contribute to open source software:Level 2: Legal constraints ● GPL demands contributionsforced contributionsLevel 3: Business benefits ● Low knowledge protection costsvoluntary contributions ● Learning effects for the organization ● Reputation gain ● Lower costs of innovation ● Lower manufacturing costs ● Faster time to market Source: Matthias Stuermer, Sebastian Spaeth, Georg von Krogh 2009 "Extending private-collective innovation: a case study" Matthias Stürmer, Ernst & Young

Theory to explain firm contributions Rivalry proprietary software yes no yes private good club goodExcludability no commons public good open source software Matthias Stürmer, Ernst & Young

Theory to explain firm contributions1. Private investment model ● Appropriation of financial returns from innovations through IPRs → patents, copyright, licenses, trade secrets ● Knowledge spillover reduces innovators benefits2. Collective innovation model ● Investments in public goods → non-rival, non-excludable ● Free riding problem → public funding, governments3. Private-collective model of innovation ● Innovators privately fund creation of public goods ● Example: production of open source software by firms Matthias Stürmer, Ernst & Young

Private-collective model of innovation● Free knowledge sharing● Explains conditions when innovators receive rewards from private investments in public good innovations● Rewards from process of innovation surpasses rewards of free-riders → involvement in innovation process● Process-related rewards are larger than process-related costs → public good innovation● What are such rewards or incentives? Sources: Eric von Hippel, Georg von Krogh 2003 “Open Source Software and the Private- Collective Innovation Model: Issues for Organization Science” Eric von Hippel and Georg von Krogh 2006 “Free revealing and the private- collective model for innovation incentives” Georg von Krogh 2008 “Researching the Private-Collective Innovation Model” Matthias Stürmer, Ernst & Young

Why do managers want a community?Benefits for open source project leaders having an active community: ● Free feature development ● Free extension development ● Free testing ● Free bug reporting ● Free bug fixing ● Free customer support ● Free documentation ● Free marketing ● etc. Matthias Stürmer, Ernst & Young

Best practices incorporate community building Two examples: Eclipse by IBM Maemo by Nokia Matthias Stürmer, Ernst & Young

Evidence from the Eclipse caseKey benefits for IBM:1. COCOMO: external contributions of 21.5 million LOC by 2007 ~ 214,000 man-months ~ 1.7 billion USD2. Standard-setting in Java IDE, beating competitor Sun3. Strategic platform for IBM software solutions: basis for proprietary applications Source: Sebastian Spaeth, Matthias Stuermer, Georg von Krogh 2010 "Enabling knowledge creation through outsiders: towards a push model of open innovation" Matthias Stürmer, Ernst & Young

What did IBM do?1. Preemptive generosity ● Revealing of initial Eclipse source code by IBM2. Continuous commitment ● Constant number of IBM programmers in Eclipse ● Constant level of participation in newsgroups3. Adaptive governance structures (giving up control) ● Non-profit foundation with equal membership of firms4. Lowering barriers to entry ● Sub-projects by non-IBM people; modular architecture Source: Sebastian Spaeth, Matthias Stuermer, Georg von Krogh 2010 "Enabling knowledge creation through outsiders: towards a push model of open innovation" Matthias Stürmer, Ernst & Young

Nokias (past) open sourcecommunity building● 2003: product decision for Nokia 770 tablet● 2007: successor devices N800 and N810● June 2009: Nokia partners with Intel for Maemo● August 2009: Maemo shall supersede Symbian as smartphone platform● October 2009: Nokia releases smartphone N900● March 2010: Nokia Maemo and Intel Moblin become MeeGo● March 2011: Nokia partners with Microsoft for Windows Phone 7... (for strategic reasons) Matthias Stürmer, Ernst & Young

What did Nokia do? Source: Matthias Stuermer, Sebastian Spaeth, Georg von Krogh 2009 "Extending private-collective innovation: a case study" Matthias Stürmer, Ernst & Young

Control of open source projectsCommunity-driven open source projects● Meritocracy: “exercise of control on the basis of knowledge” *● Technical contributions and organizational-building behavior lead to authority and control **Firm-driven open source projects● Why do firms want control?● Business model: value creation and value appropriation● Firms need control to appropriate returns of investment● Balancing act between openness and control Sources: * Max Weber 1978 “Economy and society” ** Siobhán OMahony and Fabrizio Ferraro 2007 The emergence of governance in an open source community Matthias Stürmer, Ernst & Young

Firms influencing open source projectsCorporations influence open source projects when...● firms reveal previously proprietary code.● firms contribute code.● firms control release management.● firms employ core developers who previously contributed as unpaid volunteers.● firms contract intermediary OSS firms and individuals.Firm-driven open source projects face challenges such as.. ● lack of external contributions. (issue 1) ● possible crowding-out effects of intrinsic motivation. (issue 2) Matthias Stürmer, Ernst & Young

Issue 1:Balancing act between openness and controlControl decreases contributions *● Transparency increases contributions strongly **● Accessibility increases contributions slightly **Balancing is difficult● Too much control: communities may not contribute with all of their energy, interest, and creativity● Too little control: results may not serve the firms goals Sources: * Sonali Shah 2006 “Motivation, governance, and the viability of hybrid forms in open source software development”; Dahlander and Magnusson 2005 “Relationships between open source software companies and communities: observations from Nordic firms” ** Georg von Krogh, Sebastian Spaeth, Matthias Stuermer, Guido Henkel 2009 “The Credible Sponsor: Participants’ Motivation and Organization Attributes in Collaborative Digital Innovation Matthias Stürmer, Ernst & Young

Issue 1: Effect of control on motivationPerceived firm attributes Individual Identification, Motivation, and Contribution ⊘       Source: Georg von Krogh, Sebastian Spaeth, Matthias Stuermer, Guido Henkel 2009 “The Credible Sponsor: Participants’ Motivation and Organization Attributes in Collaborative Digital Innovation Matthias Stürmer, Ernst & Young

Issue 2:Crowding-out of intrinsic motivation Source: Matthias Stürmer, LinuxTag 2007 Berlin http://www.slideshare.net/nice/crowding-effects-how-money-influences-open-source-projects-and-its-contributors Matthias Stürmer, Ernst & Young

Ernst & Youngsnew publication on open source● For your clients: Why and how to professionally use open source software● Content: ● Benefits, risks and good practices ● Professional application of open source software ● Legal aspects of open source ● Background information on open source software P DF o n line end 1 of J une 201 Matthias Stürmer, Ernst & Young

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Doing the Impossible: Managing Open Source Communities

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