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 / Autumn 2009 / Issue 56(originally published by Booz & Company)


The Promise (and Perils) of Open Collaboration

Companies like IBM and P&G have prospered by opening their borders, but there are cautionary lessons from the quality movement of the 1980s.

The open source movement has become a force for widespread renewal and change in corporate management over the last decade. During its brief lifetime, open source has produced top-quality software, such as Mozilla’s Firefox Web browser and the Eclipse Foundation’s family of open source software projects, which serve as platforms for many of IBM’s products. The open source movement has encouraged a range of companies, from high-tech startups to technology giants, to try their hand at collaborative software development. It also has provided a model for the “open innovation” movement at such companies as Procter & Gamble Company, which have advanced their market positions by using social networks and data sharing to improve and expand product development and streamline their supply chains.

For many managers, embracing the open source movement can feel a bit unsettling, because that movement is based on a culture that is antithetical to many mainstream corporate practices. Collaborators share ideas and improvements freely even with those outside the company, a practice that flies in the face of the conventional approach of holding intellectual capital closely within the corporation. In open source, the votes of key contributors count the most in decision making; voting power is not determined by title or hierarchical position. And product quality and integrity, not profit margins or corporate deadlines, determine the most critical development decisions. As a consequence, a number of companies that have become involved with open source software development — most famously IBM — have also been drawn inexorably toward a more open model of management and away from a culture of secrecy and strict hierarchies.

As companies outside the computer industry adopt the collaborative precepts of open source to improve their research and development efforts, they too undergo some major management shifts. P&G, for example, once known as an obsessively secretive organization, has thrown open its laboratory doors and invited outside collaborators to help develop new technologies and products, and at the same time is sharing some of its own intellectual property freely.

Whether a business is developing software or consumer products, the promise and challenge of what we will refer to collectively as the open collaboration movement is the same: It serves as a dynamic knowledge exchange, encouraging outside ideas to cross company borders, and empowering employees to work extensively in outside networks and collaborations.

Although it’s easy to get caught up in the enthusiasm for open collaboration, advocates should remember that many companies have been here before. In its potential to improve corporate growth and customer satisfaction, as well as in its underlying principles, open collaboration resembles the quality movement that was prevalent in North American and European companies in the 1980s.

Corporate leaders who are considering embracing the open collaboration movement can learn much from the complex history of the quality movement. At its best, it greatly benefited some companies. The Toyota Motor Corporation, for example, became the world’s preeminent automaker by adopting and maintaining a comprehensive quality philosophy that spanned everything from engineering and production to marketing and strategic planning. The quality movement also enabled U.S. automakers, especially Ford Motor Company, to thrive for a time. At many companies, the quality movement began as an intriguing possibility for breakthrough performance; it then became a force for management reform, then a must-have management fad.

But the quality movement of the 1980s also had many failures. Under such names as “statistical process control,” “Six Sigma,” or “total quality management,” the practice of quality-oriented management was frequently misunderstood, misapplied, and eventually abandoned, often at the expense of customers, employees, and shareholders. Today, many companies that once embraced the concept — for example, some manufacturers of cell phones and appliances — are being challenged by Korean companies that have borrowed more successfully from Toyota’s quality playbook. And therein lies a cautionary tale for those who hope to make the most of open collaboration.

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