Open Innovation's Challenge: Letting Go Is Hard To Do

Companies want R&D help from outsiders, but granting them authority is another matter

Open-source software provides an important example of how companies can leverage external sources of innovation. In practice, however, big high-tech companies often have a difficult time collaborating and sharing control.

While most people have heard of Linux, an open-source community founded by individual programmers, increasingly companies are sponsoring their own communities and supplying development resources, infrastructure, and initial technology in the hope of attracting individuals and other businesses to help them create products and services for potential users. Sponsors also set rules for developing and using cooperatively developed software, to align the community to corporate objectives and avoid time-consuming negotiations inherent in shared governance.

But the tighter their control, the harder it is to attract outside participation. Sharing seems particularly challenging for large companies that are used to having their own way and running their own ecosystems. In the past five years, three big companies have created new open-source projects and communities to adapt Linux for use in mobile communication devices. None would be mistaken for a grassroots democracy.

Early Breakthroughs

The first was Nokia (NOK), which in 2005 announced its Maemo project and released the first of its series of "Internet tablets" (the Nokia 770, followed by the N800, N810, and N900), which boast larger screens and form factors than Symbian-based smartphones. In 2007, Intel (INTC) announced it had cloned the Maemo code to create Moblin, a version of Linux that would run on its Atom processors rather the ARM-based CPUs used in Nokia and other mobile phones.

And most famously, Google (GOOG) announced its Android operating system, also in 2007. The first phone shipped a year later, and since then more than two dozen phones have been developed. Led by Motorola's (MOT) Droid, Android captured nearly 10% of the U.S. smartphone market last year.

In all cases, computer codes are shared, but production decisions are the sponsors alone. This situation is not unique to open source. Over the years, companies such as IBM (IBM), Intel, Microsoft (MSFT), Qualcomm (QCOM), and Sun Microsystems (JAVA) have created multicompany standardization consortiums in which they exerted de facto control.

Ways To Be Open

When Siobhán O'Mahony of Boston University and I investigated sponsored open-source communities, we identified three dimensions of openness: intellectual property, production, and governance. All companies using an open-source license (such as the GPL) provide access to IP, and some solicit outside code contributions, but only rarely do these businesses share actual governance. Without shared governance, outsiders have no assurance that the technology will evolve in ways that meet their own strategic objectives.

Since our paper was published in 2008, control-freak sponsors have become even more common. Communities are proliferating, but hosts continue to dominate production and decision-making in their Potemkin communities, whether through formal rules or by providing all the development resources and making all the day-to-day technology decisions.

When it comes to true cooperative technology development—what researchers call pooled R&D—Apple (AAPL) has proved to be an unlikely exemplar: The creation of the WebKit project from its Safari browser has enabled desktop-caliber mobile-phone browsers for Symbian, the iPhone, Android, and soon the BlackBerry.

Setting the Benchmarks

But the best role model is Eclipse, formed through IBM's 2001 donation of its Java development software. IBM executives decided to share control when they realized "they needed Eclipse to become independent to achieve their strategic goal to have the broader Java ecosystem adopt Eclipse," says Mike Milinkovich, executive director of the Eclipse Foundation. Since then, the foundation has been able to attract outside participation not only through its formal processes, but also through new bottom-up initiatives created and led by outsiders.

For better or worse, perceptions can be self-perpetuating. Nokia spent more than $400 million to buy out Symbian, the supplier of its smartphone operating system, so the handset maker could convert it to open source. After consulting directly with Eclipse, it created a nonprofit foundation and released more than 40 million lines of source code in February. Still, development remains almost entirely funded by Nokia, and it remains Symbian's dominant handset customer, as longtime partners Sony Ericsson and Samsung hedge their bets and former licensees such as Motorola have left entirely.

In an encouraging sign, though, Nokia and Intel agreed in February to merge the Maemo and Moblin projects to form MeeGo, which would be administered by the nonprofit Linux Foundation.

It's too soon to say whether Android, Symbian, or MeeGo will match Eclipse's benchmark for openness in governance and production. In the end, Eclipse worked because the community was convinced that IBM would let go, which it did after deciding true collaboration was in its own self-interest. It remains to be seen whether Google, Nokia, or Intel will do the same.

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