Stanford and Harvard teach businesses how to squash open source
Having given in to gravity, America's elite graduate schools are taking on open source.
In recent research published in Production and Operations Management, Deishin Lee (Harvard Business School) and Haim Mendelson (Stanford Graduate School of Business) teach would-be business executives how to "Divide and Conquer: Competing with Free Technology Under Network Effects."
The professors argue that:
(T)he ideal scenario for the commercial vendor is to bring its product to market first, to judiciously improve its product features, to keep its product "closed" so the open-source product cannot tap into the network already built by the commercial product, and to segment the market so it can take advantage of a divide-and-conquer strategy.
But what to do if the open-source product gets to market first?
In that case, the commercial vendor does well to enter the market with a compatible product and then invest in new product features to make its product compelling even though it costs more--a strategy sometimes known as "embrace and extend." In this case, being "open" (or compatible) helps the commercial firm tap into the network created by the free product. Then, the commercial firm must compete by out-innovating the free product.
It's nice to see that $48,921 in Stanford MBA tuition going to a such a worthy cause.
More intriguingly, despite open source's still-small market share relative to the Microsofts and Oracles of the world, it's surely meaningful that professors from the world's elite business institutions are turning their attention to figuring out how to beat open source. If it weren't a threat, there would be no market for research like this.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
Mind you, free software <a href="http://notnews.today.com/2008/09/22/free-software-foundation-announces-gnuphone/">frequently does itself no favours</a>.
I will close with Thomas Jefferson's Warning To America : "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Written by Jefferson in a letter to the Secretary of the Treasury Albert Gallatin (1802).
....$50K buys you the sound business advice "If you can't beat 'em, join 'em".
Nice work if you can get it!
- by suleske September 25, 2008 10:54 AM PDT
- Matt, thanks for the eye on academia! I posted a pretty lengthy fork of your article on my blog, intertwined with text from an interview I did over the summer with a guy who knows a thing or two about Open Source methods in business:
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