Winning strategies for using open source and intellectual property

The terms “open source” and “intellectual property” (IP) appear, on the surface, to be opposites. The purpose of this blog is to examine this and understand how and when to use open source and IP.

At the simplest level, IP in a corporation means that output created by employees is owned by the organisation, and therefore it can choose how to manage, license and sell its IP. This is by far the traditional method of working. If an organisation wants something, it creates it. But there are constraints, the biggest being the ability of the organisation to actually create what it needs. The other key risk is IP theft, which forces the organisation to create a strong governance process to protect its IP, which slows down the organisation.

On the other hand, open source has a number of key principles that say its license should not restrict anyone from selling or giving away the output (traditionally software but it can be anything).

The value of open source is more the input than the output — i.e, the collaboration to create open source software is highly valued. Through platforms such as GitHub, anyone can be involved. Indeed, quite often employers will look at the amount of contributions an engineer has made to GitHub to assess the engineer’s worth.

So a major point in favour of open source is that the speed, quality and content developed through an open source project are going to be significantly better than running an equivalent project in-house in all respects — assuming there are contributors. The obvious anti-pattern for open source is that if you are creating something so unique that no one else is doing it, then the open source method won’t necessarily help.

However, what’s the point of creating (open source) software that I get no revenue for?

Everyone’s doing it

Large software (and hardware) organisations have faced this dilemma, but today virtually every organisation has an open source strategy.  Red Hat is one of the most significant open source contributors. Its business model is a simple one — to enable the best software to be created through the open source community and then to apply Red Hat’s additional expertise to “enterprise” level solutions where applicable. This model has made Red Hat very successful.

Other organisations have followed the Red Hat model but in varying degrees. Take Microsoft, for example. Office and Windows are still very much Microsoft IP given the significant investment, but their pipeline of new development is all open-source-based.

In the pharma industry, where R&D costs are high and speed to market is long, although you would expect a relatively negative approach to open source, there are many moves to radically review the industry’s position on open source.

Amazon Web services makes an open source statement. (Do we actually believe it?) And Facebook says open source is good for business:

“It means we build better software, write better code, our engineers are able to work with more pride, and we’re able to retain the world’s best engineers because they know they can open-source their work.” Ultimately, because engineers can see for themselves the kinds of things Facebook is working on, it makes it easier to attract the top talent. “It’s not all altruism, there’s solid business sense behind this.”

– James Pearce, Facebook, Ventue Beat

Source: https://opensource.org/strategic

However, it’s not all good news; Openstack is an interesting case in point. Openstack should have been an open-source-based success. However, current analysis suggests that it simply hasn’t delivered functionality quickly enough and therefore is losing market traction.

The open source phenomenon

So let’s relook at why open source is such a significant phenomenon. In 2015 Leading Edge Forum’s Simon Wardley wrote a blog post, “Open source as weapon.” Simon’s assertions are very logical indeed. There is no single model that fits all — it absolutely depends on where the organisation is in its product lifecycle, from genesis all the way through to commodity.

At the genesis level, in the majority of situations, it will require an organisation’s own intellect (i.e., IP) to develop an idea because it probably doesn’t exist. This genesis stage will last for very different lengths of time depending on what is being developed.

However, as soon as the solution moves out of genesis into custom built and certainly into a product, using open source most definitely creates an “accelerator” (as opposed to IP/copyrights/trademarks, which act as a fantastic decelerator). The reason open source acts as an accelerator is it provides the richest and broadest resource pools to contribute to the product. Furthermore, as experienced by the majority of the top employers, it attracts the most sought-after developers and analysts to work at these organisations.

As the product matures, it provides a marketplace that the business can then build upon.  The marketplace is critical, as it effectively means there is a user base already wanting to use the product and build upon it.

The value of IP

Of course, for every pattern there is an anti-pattern. Not surprisingly, “IP drives strategic advantage” becomes a common theme. The CNBC IQ 100 (CNBC innovators list) continues to find that those companies using IP to lead their sectors — and, more importantly, reach across sectors — are making huge market impacts.

However, in reading many of these articles, my primary conclusion is that an organisation needs to innovate to retain a strategic advantage — i.e., gain market share or increase profit/revenue. There are a number of base activities an organisation must concentrate on for this.

First and foremost, any IP developed must be protected in order that it not be lost or stolen. Second, and equally important, is to monetise the IP strategy — in other words, work out the level of investment required versus the additional profit/revenue that could be generated. We come full circle in that in order to monetize, an assessment of IP versus open source is required.

Manage carefully

Open source doesn’t guarantee success and, in fact, could create more of a business problem than before (i.e., giving away a company’s position in the market).  But used correctly, open source will provide an acceleration to solution development that is otherwise unattainable.

Open source is most definitely not a one-size-fits-all approach, which means an organisation needs to create an IP and open source position.  It needs to pay very close attention to detail so that the approach is managed carefully.  Don’t believe all the headlines — every large organisation will have a public message on the use of open source, but that doesn’t necessarily mean the organisation’s approach goes very broad or deep.

A significant by-product of open source is the transparency of capability and competence, which changes the way the job market works completely — much more through evidence rather than supposed experience.  Education and training with an organisation are key, on both IP management and open source development, in order for the approach to be well thought through and structured.

This post originally appeared in Neil Fagan’s blog.


Neil Fagan is CTO of the UK Government Security and Intelligence Account in Global Infrastructure Services. He is an enterprise architecture expert, leading teams of architects who work on solutions from initial concept through delivery and support. @neilfagan

 

RELATED LINKS

DXC Technology and open source

Leadership through humility

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: