Open Source Circular Economy Article (& Open Source Business Models)

business-models

#1

Hello Fellow Open Source Circular Economicians!,

My name is Averill Brewer and I am a writer covering the circular economy. I would love to chat with you all about open sourcing business models and designs–open sourcing as a concept outside of software/hardware and its relation to the circular economy.

The article I am writing is obviously about open source collaboration. I found the article about open sourcing on Circulatenews very informative and now I would like to touch on a few points and ask a few questions:

1). Business schools still preach the importance of protecting a company against the risk of “technology transfer”-an employee for example, in the design department at Audi leave Audi and brings his design ideas to BMW. In the Circulate article you touched a bit about competitors stealing ideas, but would you please expand on the idea more.
-How do we convince a business to transparently collaborate and share a design or business model with the community? What is their motivation for doing so.

2). Open sourcing is the crux of circular economics in that it creates a system for solving major global problems (like plastic waste). In this context it makes complete sense.
-What has digital open sourcing (the success of Linux) taught us about its application to the wider business model/profit making context.
(Does this make sense?)

Let’s start with these two questions for now. Thank you so much for sharing your thoughts with me!

Averill


[BoST Call, April 25, 2016] – General Call of provisional BoST No 12
Ask Us Anything! (Press & Partners)
#2

Hi Averill,

Really great to have you here :slightly_smiling:

There are other people here who will have great responses to your questions, but I am gonna try to give a few of my answers.

1) How do we convince a business to transparently collaborate and share a design or business model with the community? What is their motivation for doing so.

It is in the interest of companies to develop transparent collaboration for a few reasons:

  • Open Innovation leads to cheaper products because the cost to development decreases exponentially (no patents, people chime in with their own improvements)

  • Open innovation is always faster and more secure than closed innovation, just by the simple fact that more people have access to it and can adapt it to their own needs.

  • Being the first person/company to share an innovation in the open automatically positions you as the go-to guy, with the reputation that goes with it. This rule works as long as you build a community of contributors and deliver a quality product

  • It is easier to access the best talent in the world, since people from all over the world can access an Open Source project

  • Not everyone can compete with a company even if it is Open Source and you can copy it. To build a successful company you also need the processes, the machinery and the talent to produce and market a product

  • Besides, copycats of Open Source projects have had a beneficial effect on companies, even when they had the means to produce at the same speed and at a lower price. Normally lower price also means lower quality. This allows more people to afford the copycats copy, which leads to creating a bigger awareness, market and ecosystem to a new innovation. Once the cheaper products fails or breaks, consumers usually go to the player who has the best reputation (meaning the original creator). Some examples of this are Arduino, OpenRov, OpenDesk, Sparkfun, OSVehicle, Tesla…

  • This phenomenon has happened with the Internet which was invented in '93 and thanks to Open Source is has become the massive market it is today. 3D printers were invented before the Internet, but because of patents it took 20 extra years to become a relevant industry. From the moment the first Open Source 3D printers appeared, the market exploded with new applications and created opportunities for all sorts of markets and industries,

Technology by itself means nothing if you don’t have a list of customers, and vice-versa. Big companies already have a reputation, a customer base and experience in their craft, so it seems logical that they could only benefit from opening their projects and getting access to the innovations that people outside of their companies can develop on top of them.

I made an article on this that I think can complete these points pretty well.

In summary, communities of contributors are a better protection than patents, which are just papers that cost a lot of money and only give you the right to sue some other company.

Open Source, is generally a win-win for everyone, while patents are generally a win-lose situation, or even lose-lose when companies decide to sue each other over similar inventions.

2). What has digital open sourcing (the success of Linux) taught us about its application to the wider business model/profit making context.

Regarding business models, software and hardware are pretty different businesses and games altogether. Software is pretty easy to produce, copy and distribute, while hardware involves stocking materials, processing and moving them around.

The main lesson that has emerged from the Open Hardware movement is: “To make something profitable you just have to sell it for more than it costs” - Chris Anderson

To illustrate how this looks in practical terms Lars Zimmermann (@Lars2i), Mathilde Berchon and Benjamin Tincq have made an amazing work documenting the business models that exist for hardware here. here and here respectively.

Creative Commons also recently made an amazing article on this with some hardware use cases.

Hope I haven’t flooded you with too much information. Let me know if something is not very clear or if you have any question. Would be glad to go deeper into the subject :slightly_smiling:


How can I protect my Open Source project from being ripped off?
#3

Such an insightful response! Thank you Jaime.


#4

admin note: I relocated this from “Uncategorized” to the “Business” category.


#5

Although this is often, perhaps usually the case, I don’t think we have the data to claim that it is always the case!
otherwise, some great points. I’ll add more in a second.


#6

Hi @averillmb , great to see you here.
Regarding ‘technology transfer’: this is certainly a different perspective in the open source world! :slight_smile:
In open source, ideas are not generally ‘stolen’, they are simply used by everyone who has an interest in using it. Different companies may have different opinions on how to implement that idea, or different uses for it in their particular market, but nobody has a monopoly on it.

Now, you might still want to prevent your employees from running off to other companies for other reasons - you would certainly want to hang on to somebody who knows everything there is to know about your company, its clients, and its products. Not because they’ll give that information to your competitors, but simply because that knowledge and experience makes them a valuable part of your organisation.
Stopping them from discussing their ideas with other specialists, regardless of their company, seems like a pretty good way to make the employee unhappy and to slow development of new and interesting ideas.
This has actually been a problem in the tech world in recent years: because Amazon was so secretive, few experienced people wanted to work for them.

Often when I am advocating for companies to adopt an open source approach, people assume that I am suggesting that they open source the products that they have spent decades developing and investing millions of dollars in. Ok, that would be nice, but that’s not what I’m suggesting.
Instead, it makes a lot more sense for companies to look at the problems they need to overcome to reach their objectives, or to think about tools and resources which would be useful in their industry overall, and start something new, with collaboration in mind. Then they can release their ideas and early prototypes, and invite collaboration from others, gradually building technology together with others.

The auto industry actually does this occasionally. They all need a digital entertainment system for their cars, but it’s not exactly an area where they try to differentiate greatly. Most car manufacturers have other specialities. So a group of manufacturers got together in a consortium to develop Automotive Linux - building on what was already available, and adapting it to the needs of the industry. With everyone contributing, Mazda can’t ‘steal’ the technology from Toyota - Toyota didn’t develop it alone, so it isn’t theirs to be stolen, and it is available to everybody!
Even Renault (who is not part of the consortium) is able to use Automotive Linux… which might seem unfair at first glance.

But there are two aspects which makes it fair.

  1. relationship to the community.
    One is that these companies have decided to form a consortium - they have regular meetings and communication that brings them together and encourages them to discuss things freely amongst themselves. Renault doesn’t contribute to or benefit from that conversation. Maybe they can benefit in the short term by using the software and not contributing, but in the long term they are damaging their reputation and their relationship with their employees.
    I don’t think that the formal consortium is actually necessary, there is enough of a social and legal structure in an open source project that the consortium is redundant and inefficient, but it’s a useful first stage - I think of it as ‘training wheels’ for corporations to develop on open source in ways in which they’re familiar.

  2. Copyleft.
    The Linux Kernel is licensed under the GNU General Public License (GPL), which is a copyright license type known as ‘copyleft’.

A Copyleft license grows the commons. It says that "you can use this software for whatever purpose you like, but if you publish a modified version of the software, you must also release it under this same copyleft license, publishing the source code and allowing others to use it for any purpose (as long as it’s under the same license).

Remember that each automotive manufacturer developing Automotive Linux is likely using slightly different flavours of the same software - they are adapting it to their unique purposes, and fixing any problems along the way. The good thing is, that when Toyota finds a bug, they can fix it, and the license requires that they share their improvement with the public, under the GPL. At the same time, Mazda is fixing any bugs they find, and releasing the fixes under the GPL.

Basically anybody who wants to adapt the core software to their needs is going to have to make some useful changes to it. And those changes have to be shared with everybody else, whether you’Re part of a consortium or not.

So, if Renault chooses to take Automotive Linux modules that Mazda, Toyota etc have developed (I don’t know why I have picked Renault as the bad guy in this example - sorry Renault!) they are legally required to release any improvements for Mazda, Toyota and the general public to use. So with copyleft licenses, it’s actually very difficult to just take and not contribute. In this case, Renault would be contributing to the wider pool of software, but they are disadvantaged by not being part of the community around the software, and not having a good relationship with the other companies.


#7

Very nice to find this discussion on here. I face similar challenges with a project I’m working on called Endless Objects. www.endlessobjects.com and I recently published a blog about this https://www.linkedin.com/pulse/time-make-open-source-part-your-business-strategy-have-gaspard-bos
Another perhaps useful source of info is included in this post
SOLUTION - (Videos & Tool on) Open Source Business Models for Circular Economy

I had a hard time finding good examples of companies that are not making DIY hardware products but actual consumer products. One that I didn’t include in the post but is also a good example is Teenage Engineering that lets people 3d print their own buttons for the synthesizer. That also shows that you don’t have to open-source everything from your business but parts from it can help create a better proposition.

I agree as well that fostering a community is something that’s important for a (partly) open-source business. The relationship between people and their product and therefore also their supplier/brand needs to change in order to keep products and materials in the loop. You can argue from a circular economy business model archetypes (www.productsthatlast.nl) benefits to a business (getting back materials) how you can use open-source as a business strategy to achieve this.


#8

Nice blog post, Gaspard! looking forward to see how things develop with Endless Objects.


#9

Great clarity on the “copy-cat” subject, thank you! I am going to let all of this information sink in!:slight_smile: