Open is better than closed

A decade ago, open source was an anathema to most tech companies; today, it’s so common as to be almost beyond question.

A good article in Venture Beat, “It’s actually open source software that’s eating the world”, uses the numbers to show the impressive development of open source software over the last decade, concluding that that there’s really nothing much left to talk about and that open models are intrinsically superior to their proprietary rivals.

Actually, the explanation for all this is quite simple: the internet has created an interconnected world, drastically reducing transaction and coordination costs. Before the internet, it made sense to carry out most tasks within the company. But as costs have fallen, it has become increasingly attractive to coordinate resources located outside the firm, where there are more resources that can be marshaled around. Which explains why companies that have traditionally defended the proprietary model, such as Microsoft, are replacing their senior management with people able to understand this revolution and that want to develop a more collaborative culture based on open source software, something that Steve Ballmer once described as “a cancer”.

Microsoft converted its .NET programming framework to open source in November, did the same with its Distributed Machine Learning toolkit in the same month, and has just announced it intends to do the same with Chakra, the JavaScript engine behind its browsers and many other products. The signs are that this is just the beginning of a major shift.

Apple, a company whose products are largely based on open source, has published the source code of the Swift compiler, a move that represents a major win for the open source community and makes the programming language much more appealing. For Google, the question is as simple and clear as the phrase “default to open” in its founding principles of innovation: there’s no point reinventing the wheel, and there will always be more talent outside the company than within it. It’s the same story with Facebook. Another of the world’s most innovative companies, Tesla, has always understood that making its patents available in the open has been a decisive element in its competitiveness.

The challenge now is to translate that philosophy beyond programming.Robin Chase, the co-founder and CEO of Zipcar, writes in a recent Forbes article that the age of industrial capitalism is over, and that thanks to internet it’s possible to share assets and thus generate much higher differential value. In four years it is possible to convert a company with no real estate assets into the world’s largest hotel chain, or to create one of the planet’s largest transportation network without having to own any vehicles.

What are the implications of all this in the corporate world? Quite simply that we’re going to have to rethink how best to extract the advantages of lower-than-ever transaction and coordination costs, and how to exploit the possibilities that greater openness can create. This is a process that has to begin by handing over the baton to a new generation of managers, not necessarily on the basis of age, but on outlook. As has always been the case, the most successful companies have always been those best able to adapt to their environment, and a fundamental characteristic of this environment is lower coordination and transaction costs.

(En espa?ol, aquí)