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George Dafermos * Open Coding Innovation - a roadmap to socially-responsible, sustainable economic and technological growth (was: Re: [ox-en] Conference documentation)



Open Coding Innovation
======================

George Dafermos [georgedafermos lycos.co.uk]

a roadmap to socially-responsible, sustainable economic and technological growth
--------------------------------------------------------------------------------

** Unable to import figure Dafermos1.png **

Ingredients of advance for any social and economic system
=========================================================

Social capital
--------------

o    Humankind has progressed because of its ability to
     collaboratively solve problems and share risks

o    We need modern rather than traditional and open instead of closed
     forms of trust

o    Vital to encourage institutional and entrepreneurial innovation
     and joint risk-taking

o    Self-organisation and reciprocal co-operation in pursuit of
     innovation and change in an open social system

Knowledge
---------

o    Know how to:

     o    Design institutions that foster social and economic growth
          and innovation

     o    Satisfy community, individual and, market needs

     o    Turn scientific invention and discovery and technological
          change into both useful products and services

o    Dilemma: Who should own knowledge - Ownership rights?

     o    Ie. Human Genome Project - Who do you trust?

     o    Organisation(s) or the government(s)?

Financial Markets and Trade
---------------------------

o    Debate: Globally interconnected (fragile) and deregulated trade
     and investment or state-regulated, defensive nationalism and
     protectionism?

o    From shareholders to stakeholders

o    From financial engineering and creative accounting to financial
     and management accountability towards the surrounding community
     and environment

     o    Ie. Enron & Arthur Andersen

     o    Ie. Monsanto and GM food

What about Technological Innovation?
------------------------------------

o    Market-pull or Technology-push?

o    Disruptive or sustaining innovation?

o    Europe vs. America?

o    Awe at technological change commits one to deliver constant
     change to awe at...

o    Helpful or dynamic and confusing?

o    Constant demand for the newer version of CD players and MP3s or
     Napster as environment's savior?

Organisations and Determinants of Organisational Structure
==========================================================

Why Organisations exist?
------------------------

o    Organisations work more efficiently than a group of independent
     contractors?

     o    The issue of co-ordination and trust

o    Closed and centralised mindset?

o    Organisations are repositories and distributors of commercially
     valuable know-how

     o    Organisational memory: routines and procedures

     o    Organisation aids knowledge

Determinants of Organisational Structure
----------------------------------------

o    Industrial-organisational structure dependent upon market
     characteristics as defined by

     o    communication, transaction and

     o    transportation costs, and

     o    production technology and social needs

o    Ie. from craft production and merchants to mass markets, mass
     production and, economies of scale and scope

o    Ie. "Argaunauts": project centric organisations that disbanded
     once the "mission" had come to an end

o    Contemporary analogy: Hollywood and Silicon Valley

Introduction to Organisations
=============================

Hierarchy
---------

o    Hierarchy is built on three assumptions:

     o    The environment is stable

     o    The processes are known

     o    The output is given

o    Do they still hold true?

Organisations
-------------

o    Army and Church were the first multi-layered organisations

o    Of course hierarchic and centrally planned

     o    Why? Knowledge should not flow out of the system boundaries

F.W. Taylor
-----------

o    He realised that the crucial asset of business "knowledge" was
     well guarded in the heads of workers and strived to empower
     managers to understand the production process

o    Ironically, the man who realised the power of communicating
     knowledge and had tried to do exactly that, had formulated a
     mindset that regarded the organisation as a machine and the
     workers as cogs

H. Fayol
--------

o    Dual lesson:

     o    an organisation needs rules

     o    Hierarchy results in communication breakdown

o    The former got well accepted but the latter goes still unknown

Breakdown in Communication
--------------------------

** Unable to import figure Dafermos2.png **

Employee E needs to contact employee O but cannot go to O directly due
to hierarchic (bureaucratic) impediments. So by following the line of
authority, the ladder must be climbed from E to A and then descend to
O, stopping at each rung and, then back all the way again

M. Weber
--------

o    He maintained that bureaucracy is the most efficient
     organisational design as long as the economic and social
     environment do not change radically

o    This was in year 1924. Have things changed since then?

H. Ford
-------

o    Fordism and the assembly line

     o    "Any colour they want as long as it is black"

     o    Workers regarded as cogs, incapable to think, improvise, and
          stop the production process

o    Outcome: US automobile industry seriously damaged by Japanese
     competition (and management practices)

Japanese management at Toyota
-----------------------------

o    Close relationships with suppliers (Just-In-Time) to minimise
     costs and boost innovation

o    Personnel and ideas move freely within the subcontracting network
     and the network is built on trust

o    Employee empowerment (Job-rotation and self-managing teams that
     were encouraged to improve the production process)

o    The production model seeks to ensure product quality and satisfy
     the customers' needs

Libre Software
==============

Why Libre Software has anything got to do with organisations and management styles?
-----------------------------------------------------------------------------------

LS is more than software and the LS development model is more than
another way of developing software. In stark contrast to what most
people think, libre software development is neither an anarchy nor it
is a miracle that its model is successful and sustainable

Why should we be concerned with the paradigm shift demonstrated by organisation of LS projects?
-----------------------------------------------------------------------------------------------

o    Libre Software development presents a fundamentally different
     perspective on co-ordination and organisation of production
     activity

o    The software industry is an invaluable source to identify
     emerging changes and trends

What is Libre Software?
-----------------------

o    Use the software as you wish, for whatever you wish

o    Be able to improve it, fix its bugs, augment its functionality
     and, studying its operation

o    Redistribute it to other users who can use it according to their
     own needs. This can be done for free or at a price, not fixed
     beforehand

o    Condition: Access to source code

Logic of Libre Software
-----------------------

o    Liberty of Information

o    Software is not a manufacturing industry

o    "Tragedy of the commons" is irrelevant - diminishing returns are
     not applicable because software is a network product

o    New business models and sources of revenue enabled

     o    ie. Give away the razors, sell razor blades

Software Industry: Development Models - The Cathedral & The Bazaar
==================================================================

The Cathedral
-------------

o    Closed system

o    Nearly all product development at one site

o    Central planning - co-ordination by hierarchy

o    Quadratic complexity

o    Relatively homogeneous actors

o    Proprietary knowledge (IPRs)

o    Limited parallelism and limited scope for self - organisation

o    Users producers separated

** Unable to import figure Dafermos3.png **

The Bazaar
----------

o    Open evolutionary system

o    Emergent co-ordination

o    Self organisation around ethical rules

o    Massive parallelism

o    Highly diverse actors

o    Evolutionary management

o    Quadratic complexity doesn't hold

o    High modularity

o    Public ownership (copyleft)

o    Users producers overlap

The Bazaar
----------

o    Release early and often

     o    Stimulate the community

     o    Reward developers (credit attribution)

o    Self selection of tasks

     o    Efficient allocation of resources

     o    (Programmers' time and work)

o    Work done of superb quality

     o    (if work is not of quality, another hacker will fill the
          gap)

o    Management accountability

     o    Transparent decision making

     o    (mailing list - virtual roof)

o    Trusted lieutenants

     o    Natural selection by the community

     o    Community level management?

** Unable to import figure Dafermos4.png **

o    Modularity

     o    Enables parallel development

     o    And decreases the need for co-ordination

o    Peer review

     o    Given enough eyeballs, all bugs are shallow

     o    Quality - security

Parallel release structure
--------------------------

o    Exploration vs. exploitation trade-off defied

     o    Whenever resources are allocated to the search for future
          innovation, resources dedicated to the exploitation of
          existing capabilities are sacrificed and vice versa

     o    Interdependent R&D process

     o    Efficiency and innovation (both disruptive and sustaining
          innovation ensured)

     o    No forking

The Bazaar
----------

o    Innovation

     o    Treating your users as co-developers is your least hassle
          route to rapid code improvement and effective debugging

** Unable to import figure Dafermos5.png **

o    Unprecedented growth

     o    Potential parties to a shared infrastructure can rationally
          trust it more if they can see how it works all the way down,
          and will prefer an infrastructure in which all parties have
          symmetrical rights

** Unable to import figure Dafermos6.png **

Advantages of Libre Software
============================

Availability of source code and the right to modify it
------------------------------------------------------

o    Enables unlimited tuning and improvement

     o    Port code to new hardware

     o    Adapt to changing conditions

     o    Reach a detailed understanding of how the system works

The right to use the software in any way...
-------------------------------------------

Combined with redistribution rights, ensures (if the software is
useful) a large population of developers-users, which helps to build
up a market for support and customisation which can only attract more
developers...

There is no single entity on which the future of the software depends on
------------------------------------------------------------------------

o    A company chooses not to upgrade a software product for an old
     platform

o    It went bankrupt...

Free it to save it
------------------

o    To make sure it remains supported in the future

o    Logical strategy for software developed for in-house purposes

No black boxes are possible
---------------------------

o    By having the source code, it is possible to perform a thorough
     inspection and verify the correctness...

o    Critical to the advancement, diffusion and transfer of technical
     knowledge especially to developing countries

No per copy fees can be asked for modified versions
---------------------------------------------------

o    Because working knowledge can be gathered at minimal cost, anyone
     can use the current code base to start new projects

     o    Internet software systems

     o    People were able to adopt and integrate them immediately

o    Also ensures fast diffusion - adoption

Fewer conflicting priorities due to bureaucratic constraints
------------------------------------------------------------

o    Under centralised mode of software development, progress is
     determined by economic and bureaucratic restraints

o    Ie. the marketing department may have decided that a specific
     feature is vital to their ad campaign but that no actual users
     care about

New democratic forum
--------------------

The collective desires of the community determine the direction of
progress without obliging anyone

Total Cost of Ownership reduced
-------------------------------

o    TCO: 6 stages

     o    Information gathering

     o    Acquisition or creation

     o    Deployment

     o    Training

     o    Common use and maintenance

     o    Abandonment and transition to new tech.

o    Clear advantages in acquisition, maintenance, transition

Many more are realised...
-------------------------

o    Enables the creation of new markets and business opportunities

o    Developing countries enabled to adopt advanced technologies at a
     low cost and leapfrog into the Information Age

o    Customisation to suit local needs and cultures

     o    ie. KDE is translated into 42 languages

New Business Models
===================

Loss leader/market entry
------------------------

o    ie. Mozilla project

o    Build brand loyalty

o    Enlist the effort of developers

o    Sell peripheral related products and services

Widget frosting
---------------

o    Companies selling hardware can make LS a value-added part of
     their offering and differentiate with brand and functionality

     o    ie. VA Systems

o    Accessories

     o    ie. O'Reilly and Associates

o    Service Enabler

     o    ie. Quake and Doom are popular games with open APIs that
          empower customers to create their own versions

o    Infomediary

     o    Provide consulting and searching services related to the
          selection of LS applications for specific needs

Brand licensing
---------------

o    ie. Although the code is open, only Netscape/AOL can call future
     versions Communicator

o    ie. Cygnus's trademarking of eCos and sourceware name

o    ie. Red Hat's compatibility certification program

Band-Wagoner
------------

o    Provide the context for LS projects to take advantage of the LS
     phenomenon

     o    ie. VA Linux's stewardship of Linux.com site

     o    ie. O'Reilly and HP's sponsorship of SourceXchange

     o    ie. O'Reilly support for Perl community with community web
          sites

o    Why: give and take goodwill (encourage reciprocal relationships)
     and promote related products and services

When, why and how-to "open code" a project
==========================================

When LS is a rational organisational design
-------------------------------------------

o    To avoid market fragmentation - vendors offering incompatible
     versions of the same product

o    To dethrone a product or vendor lock-in

o    To manage the industry in a way that all participants will be
     well equipped to seize benefits - keep the market competitive

o    When the users' contribution is sought (direct interaction
     between users and implementers)

o    Bring together a global community - industry on equal rights to
     discourage political maneuvering

o    When the project has over reaching consequences that demands for
     intra-industry co-operation and/or massive knowledge

Competitive Advantage
---------------------

o    Customer empowerment

o    Efficient collaboration work techniques

     o    Internet enabled communication

     o    LS leverages the Internet to access a larger community of
          the best and brightest - increase development cycle times
          whilst reducing interaction costs

o    Unity of vision and continuous innovation

     o    Inherent culture of innovation

o    Knowledge: creation and exploitation

Re - inventing management
-------------------------

o    From hierarchical management by objectives to collaborative
     management by community consensus

o    From corporate governance and central planning to community
     governance and networking of knowledge and human resources

The glue that holds the network together
----------------------------------------

o    Sustainability

     o    Healthy competition within and between LS projects

     o    Decentralisation

     o    Parallel development

o    Accountability

     o    Transparent decision making

     o    From management to leadership

o    Emergent self-organisation around ethical rules (community
     ethics)

     o    ie. Forking must be justified

     o    ie. Distributing changes without the leaders' approval is
          frowned upon

Old economy paradigm
--------------------

o    Creative companies sponsor creative projects and attract creative
     people

o    Creative companies beget creative industries and careers

New economy paradigm
--------------------

o    Creative people enact creative projects

o    Creative projects mobilise creative communities

o    Creative projects generate creative companies, industries and
     careers

Starting a LS project - prerequisites for growth
------------------------------------------------

o    Aggregation points (virtual roof)

     o    community building/awareness

o    Scratch an itch: market pull

o    Not anything boring

o    Modular and simple

o    License ensures collaboration within and between LS projects

o    Trust - meritocracy - transparency

o    Delegate everything you can

o    Exploit the power of parallel situations

o    Release early and often

Extending the Boundaries
========================

Implementing Libre Software development methods and principles to
other domains of economic and social activity

Applicability of LS to other industries
---------------------------------------

o    Education (decentralised web-enabled learning environment)

o    Music industry (online content production and Internet
     distribution)

o    Automobile industry (collaborative R&D and "zero-emission"
     vehicles)

o    Banking (Community Development Banking, ie. ShoreBank in Chicago)

o    State Organisation (ie. Free State Project)

o    Human Rights

o    Telecoms (pervasive and wireless computing - P2P)

o    Pharmaceuticals (collaborative R&D and ownership rights ie. Human
     Genome Project and Open Source Bioinformatics)

o    News Sources: OS Intelligence, weblogs and online self-organising
     social systems (ie. Slashdot, NoLogo)

o    TV content (ie. NerdTV)

o    Others?

Education becomes life-long Learning
------------------------------------

o    From MIT OpenCourseWare Pilot...to decentralised (P2P?) & modular
     Web-based learning environment

o    Open Code the base technology (platform) - infrastructural layer
     and close code the (G)UI or/and the end-user applications that
     sit on top of it

     o    Condition: Well-defined interfaces between the OC platform
          and the proprietary end-user part

Deconstruction of the Music Value Chain
---------------------------------------

o    Most of the money consumers pay for CDs covers costs not directly
     associated with the production of the master pieces. Two thirds
     of the delivered cost of a CD comes from activities directly
     threatened by digital distribution over the Internet

o    Until recently, record companies had to build factories where CDs
     are pressed, depend on physical distribution for their products
     and promoted their "merchandise" over traditional media that face
     a trade-off in reach or richness, unlike the Internet

o    Whereas music conveyed over the Net renders these assets -
     activities obsolete. Money previously wasted can be saved since
     the reduction in CDs produced, apart from reducing manufacturing
     costs, results in fewer CD retailers, with their overhead,
     marketing and inventory costs

o    In this way, 60% of the delivered cost of today's CD can be
     saved, instead of being wasted on manufacturing, retailing and
     marketing that so far has failed to deliver but it was the sole
     way to generate consumer awareness of new acts

o    The future: Subscription fee based model

o    whatever, whenever, wherever

     o    "Jukebox in the sky" - "eat all you can" model

o    Economic Logic: Today's average consumer spends $70 on CDs. If
     consumers instead paid a subscription fee, say $10 a month, for
     unlimited access to music and therefore spend twice as much a
     year, the global industry revenues could well double

Automobile Industry - "The Open Source Development Model"
---------------------------------------------------------

In the automobile industry, each company does its own R&D. Every
innovation is patented before it ever reaches the public, which may
take five years for the improvements to be incorporated in an actual
car after they were originally developed. If the automobile industry
started taking on an open source development model with sharing across
companies and countries, the cost and prices would eventually drop,
innovation and development would speed up and exceptional features
would be shared across many makers and models. The auto industry could
finally come up with the safe, clean energy car. The problem is that
the car companies do not seem likely to support something that they
perceive could put them out of business, even though this would not
happen since nothing stops them from developing on their own and
incorporating developments from their "open design shop" into their
own products...

By Dan Barber accessible at
http://mojolin.com/articles/open_source_model.php?session=vTVi4tc1GfTb

"Zero Emission" Cars
--------------------

o    Californian Iniative: 10% of cars offered for sale would be
     zero-emission vehicles by 2003

o    50:50 vehicles: Honda and Chevrolet have small cars with hybrid,
     battery and petrol engines, which have ranges of 700 miles

o    Problem and Opportunity: Innovation is/won't be limited in scope
     and scale

o    "We will solve our environmental problems when industry has
     innovated solutions which consumers have an incentive to buy"

Financing Social Capital Shorebank (in Chicago)
-----------------------------------------------

o    Community Development Banking

We viewed a disinvested community as a failing market...revitalising
such a community requires recognition that disinvestment is a market
phenomenon and can only be reversed by reinvigorating local markets.
Permanent, self-sustaining community renewal results from creating an
environment in which private investors inside and outside the
community are confident that their investments will be rewarded as
healthy community dynamics are restored

by Ron Grzywinski, founder of Shorebank

The Free State Project
----------------------

The Free State Project is a plan in which 20,000 or more
liberty-oriented people will move to a single state of the U.S. to
secure there a free society. We will accomplish this by first
reforming state law, opting out of federal mandates, and finally
negotiating directly with the federal government for appropriate
political autonomy. We will be a community of freedom-loving
individuals and families, and create a shining example of liberty for
the rest of the nation and the world

http://www.freestateproject.org/

Human Rights & Free Software
----------------------------

o    Accountability and verification

     o    (also goes for public and governmental functions,

     o    ie. software used for elections)

o    Conformance to scientific requirements

o    Quality

     o    (ie. systems have to stay running for human rights workers
          taking notes in mountains and rain forests, far from any
          source of technical support)

o    Fitness for users (inequality and illcontrol by governments and
     copyright-holders/corporations)

o    http://www.oreillynet.com/pub/a/network/2002/10/11/platform.html
     by Andy Oram

The Future of Telecoms
----------------------

o    Pervasive/ubiquitous computing

     o    "any information service to any device over any network"

     o    P2P is clearly the future...

     o    First emerging example: MMS

          o    From SMS (text-only messaging) to MMS (multimedia
               messaging services)

          o    First step is photo messaging: people demonstrably like
               to exchange photos - p2p drives growth

** Unable to import figure Dafermos7.png **

Global p2p messaging revenue (US$m)
-----------------------------------

o    Can new generation devices and MMS revitalise the mobile
     industry?

** Unable to import figure Dafermos8.png **

o    http://www.ovum.com/events/speakingevents/default.asp?doc=july5.htm

For More Detailed Information on Pervasive Computing...
-------------------------------------------------------

o    http://www.cc.gatech.edu/fce/pubs/tochi-millenium.pdf

o    http://www.economist.com/printedition/displayStory.cfm?Story_ID=1176136

o    http://www.ovum.com/

o    http://www.ovum.com/events/speakingevents/default.asp?doc=july5.htm

Human Genome Project
--------------------

There is no MS Word equivalent...it's the scientific process...

In biological research it's not the software that's important -- it's
the data. Since the actual data matters much more than the tools used
to process it, there's a big benefit in sharing software. A researcher
can get great advantage by getting access to other datasets, which can
be achieved by sharing the software tools. Bioinformatics companies
are never going to make money by selling their software. They're going
to make money by making drugs or other products that come out of their
research.

Molecular biology/medicine will be most advanced by the creation of a
common infrastructure -- and this is something best done with open
source tools

http://www.oreillynet.com/pub/a/network/2002/01/28/bioday1.html

Open Source Intelligence Online Self-Organizing Social Systems
--------------------------------------------------------------

o    OSOSS are facilitated by a particular type of software
     infrastructure, one that is generally web-based and characterised
     by management decentralisation, such as the "weblog"

o    The day-to-day tasks of creating new content, adding commentary,
     evaluating the quality of submitted material, providing user
     support and answering questions, and other tasks are distributed
     across the entire community via the weblog infrastructure

o    http://www.firstmonday.dk/issues/issue7_6/stalder/

o    http://wiley.ed.usu.edu/docs/ososs.pdf

NerdTV by Robert X. Cringely
----------------------------

NerdTV will still be downloaded, not streamed, and a single technical
standard will be used for all viewers no matter what kind of Internet
connection they have or what operating system they are running. The
show will appear each week in a dizzying total of five versions. Of
the three video versions, one will be for nerds, one for suits, and
the third version will be all the raw footage so you can edit your own
version and make fun of me at parties. There will be two audio-only
versions -- one MP3 and one Ogg Vorbis

Viewers will be free to share and redistribute the shows under the
General Public License, which is something no other TV network in the
world is doing. So there!

http://www.pbs.org/cringely/pulpit/pulpit20020912.html

Variability, Customisation and Responsiveness by David Stark
============================================================

For goods, technologies, and services that are 'patchy' such as
software, there is no reason to implement bureaucratic organisational
designs since the flexibility-responsiveness and customisation that
end users ask for (in other words the nature of technological change
demonstrated by the Internet) requires flexible models of economic
organisation

The key word is variabiltiy

Variability produces organisational flux. When the challenges of
responsiveness are too great for institutional routinization,
organisations' bureaucratic structures are destabilised.
Heterarchies-flatter organisational structures with distributed
accountability, decentralised decision making and multiple, often
competing goals emerge... From product design to organisational
design, "permanently beta" settings have this potential to be
participatory...

Ie. slashdot and plastic.com as "permanently beta" websites that
'recycle the web in real-time'

http://opensource.mit.edu/papers/neff-stark.pdf


_______________________
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