Lorraine Morgan of National University of Ireland Galway gave a talk entitled "Open Source as Open Innovation: Creating and Capturing Value in Value Networks", at the BCS Covent Gardens Offices on Thursday 2nd December 2010. Despite the weather restricting attendance at the talk, it was a very lively and interesting evening, with lots of views and discussion from all that attended. A very engaging and interesting evening. Here are a few thoughts on the ideas presented.
Lorraine started off by examining the issue of Business models. Most people think in terms of how do you generate revenue, forgetting that non-monetary benefits are also valuable. She introduced the concept of Open Innovation (OI), and idea first introduced by Henry Chesbrough. From her perspective, and my understanding, external ideas and knowledge have equal value as internal ideas and knowledge. This immediately made me think of the importance of Choo's Enviromental Scanning in finding external ideas and knowledge and absorbing them in the organisation. Its clear to me that information seeking must be an important part of the process of OI, particularly at the imitation stage. We talked around SWOT analysis and Porters Five Forces, and Lorraine pointed out that OI cannot work in terms of these (opening up is not a threat for example), as reputation and trust needs to be built up in the network for the concept to work. There was actually quite a discussion about this. Later on the issue of repuation came up, something that is clearly important in OS and on which Eric Raymond has written about in Homesteading the Noosphere.
OS is a from of OI, The business model used in OS is therefore essential, and needs to be rethought if OS software development is used. We need to think in terms of value creation. There are different definitions of value creation, Lorraine quoted the following "worthiness of monetary and non-monetary benefits of products and services". Stakeholders (CATWOE client, actor and owner) have different perspectives on value.
OS creates value by creating 'Networks', or 'Value Networks' (see my comment on Homesteading the Noosphere above). Traditional approaches to Value Creation need to be rethought, as they tended to neglect innovation and created networks. Some examples were given from enterprises to support this view e.g. employee/team of the month, which creates competition between teams and creates barriers for setting up networks. Different perspectives are needed - different from 'how do we keep ideas in the organisation'. With value capture therefore we need new theories of the firm. Made think about Raymond's 'The Magic Cauldron'.
Lorraine stressed the importance of Value Networks in Value Creation. There exist both internal and external Value Networks, and OI is needed inside the organisation. Competion is not the key. Sometimes members of the network need to make sacrifices in order to gain benefits from the Value Network. Reputation and trust is essential here (see above). Symbiosis can bring benefits from the Network, which outweigh the loss in competitiveness. A good example of this is reducing in costs when sharing the development of infrastructure software. Access to complementary skills are gained from the network (the whole is more productive than the some of its parts). Some important questions to be asked are: what is value and what kind of value are we capturing. I mentioned social networks, and Lorraine differenciated between Value Networks and Social Networks - the latter tend to be closed, whereas the former must be open.
Lorraine briefly described her research findings so far. She talked to a Medical supplier who had gone 100% open source in order to avoid issues such as vendor lock in etc. Costs were much reduced and they were able to spend more on training for internal staff. There was some discussion on lock in from vendors, and it is my view that its easier to create lock in's if the software license is BSD, more difficult for viral licenses such as GPL. One interesting point she made was that staff who are recruited to support particular open source products demonstrate high levels of commitment to the code than to the organisation - if the organisation shuts down their project, the developer will move on. There was quite a bit of discussion on actors e.g. pro vs. re-actor.
Overall a very useful talk, and I very much enjoyed it together with the discussion.