Open source or not? The strategist’s perspective
A decision framework inspired by the latest best business strategy practices
Don’t go open source for the sake of being open source
At the coffee machine of the data department, we’ve often dreamed out loud about releasing an open source package. Releasing open source seemed like a holy grail for us data scientists. We would become the new scikit-learn. We would be invited to talk at data summits all across the globe. But at some point in the discussion someone would finally ask:
yes, but how do we sell that to the management?
Usually, this would end the discussion here because nobody had any clue how to justify the investment. In this article, I propose a framework borrowed from the business strategy world. I hope it will help you understand when open source is a great move for the company and sell the idea to sponsors.
Software quality is not a sufficient argument
The usual rationale used by engineers to justify open sourcing is that exchanging ideas openly produces better products than the closed development approach. Exposing your sources incentivizes you to write better software because you don’t want to be considered a code monkey. It also reduces security breaches and bugs because a lot more engineers' eyeballs are scanning the code every day.
However, this is not a sufficient justification. We have plenty of examples of private best-in-class engineering. Consider Apple. They hardly open source anything, but they are world-class in every category they compete. So how do you know when open sourcing is the right strategy?
The four factors of an open sourcing decision
I combined business best practices from Exploring Strategy [1] and lessons learned from leaders of the software industry to come up with the following decision framework. It is made up of four factors that will drive your open sourcing strategy.
- Intensity of Competitive rivalry: In highly rivalrous industries, companies tend to steal innovations. Closed innovation is better where such rivalrous behaviors can be anticipated. Think for example about the digital calendar market. There is a profusion of apps coming out every year, fine-tuning the user experience to the next level every time. One will add an automatic “propose available time slots function”, and another will add a “protect focus time automatically” feature. The intensity of competition by new entrants and historical players is so fierce that open sourcing your features would be shooting yourself in the foot. Ask yourself: “How likely are my competitors to copy?”
- Existence of first-mover advantage: In winner-take-all markets where technology is central to product success, closed innovation is more strategic because it allows you to deepen your gap to competition and strengthen your advantage. Take for example LinkedIn, a platform with a strong network effect. There is only room for one LinkedIn in the world, as they were very aware. In Blitzscaling [2], Reid Hoffman recounts how they burnt millions of cash to seize the market. At this stage, open sourcing their most critical products would have reduced their precious advance to competition. Where innovation is more continuous, it makes sense to open source and slowly build the technology with the community. Be careful: first-mover advantages are often overestimated. Apple was never the first to release the technology of smartphones, MP3 players, and tablets. Ask yourself: “Can I stay ahead of the competition durably?”
- Tight-linked innovation: In industries where products are made of complex and tightly interlinked systems, open sourcing forces you to standardize each component and compromise on seamless integration between them. This is why Apple develops a majority of private software. They want tight integration and seamless experience. For example think about how your AirPods switch automatically from your MacBook to your iPhone when you get a phone call. User experience sometimes pushes towards closed innovation. Ask yourself: “How important is customer experience for my business?”
- Engineering capabilities: How important is it for you to acquire cutting-edge engineering capabilities? Open sourcing raises the bar for your engineering teams and incentivizes them to benchmark themselves to best practices. This is a powerful way to attract and grow your skills internally. Ask yourself: “What level of engineering skills do I need internally?”
Takeaways
Before open sourcing anything, think like a strategist. If you only consider the benefits on your product’s quality, you miss a fundamental dimension of strategy: your competition. The four key questions I propose allow you to consider open sourcing as a driver of competitive advantage:
- Are you making a present to your competitors?
- Could you protect your innovation to stay ahead?
- Do you need a superior customer experience?
- Do you need world-class engineers?
By asking those questions, you will cover the four fundamental factors of the open sourcing decision framework. You will be confident your open source strategy fits tightly within your corporate strategy, so it will be easy to sell the idea.
Do you have any other perspective or experience on the subject? Please let me know in the comment section.
[1] Whittington, Angwin, Regner, Johnson and Scholes, Exploring Strategy (2019), Pearson
[2] Reid Hoffman and Chris Yeh, Blitzscaling (2018), Currency.
