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Illustration by Lars Leetaru

Ten years ago, on May 22, 1997, a little-known software programmer from Pennsylvania named Eric Raymond presented a paper at a technology conference in Würzburg, Germany. Titled “The Cathedral and the Bazaar,” the paper caused an immediate stir, and its renown has only grown in the years since. It is now widely considered one of the seminal documents in the history of the software industry.

Raymond’s subject was the open source software movement, as exemplified by what was then — and still is — its most famous product, the Linux operating system. Open source projects, he pointed out, represented a radically new method of software development. Traditionally, sophisticated programs had always been “built like cathedrals, carefully crafted by individual wizards or small bands of mages working in splendid isolation.” An open source project, in contrast, was the product of a large and informal community of volunteers who in aggregate “seemed to resemble a great babbling bazaar of differing agendas and approaches.” What was amazing, Raymond wrote, was that “the Linux world not only didn’t fly apart in confusion but seemed to go from strength to strength at a speed barely imaginable to cathedral-builders.”

The bazaar model of “peer production” was unthinkable before the Internet came along. It was only when software programmers around the world gained access to a cheap, high-speed communication network that they could start sharing their code in a speedy and efficient manner. As Raymond observed, it was probably not a coincidence “that the gestation period of Linux coincided with the birth of the World Wide Web, and that Linux left its infancy during the same period in 1993–1994 that saw [an] explosion of mainstream interest in the Internet.” The Net formed the thoroughfare of the bazaar.

Of course, that thoroughfare wasn’t open only to software engineers. It was open to every person and to every company. The Net brought the bazaar, and its peer production model, right up to the doors of every business in the world. It’s hardly a surprise, then, that Raymond’s metaphor soon came to be applied far more broadly than he originally intended. Connected to the global masses through the Internet, companies no longer had to pursue innovation in splendid isolation. They had the option of replacing the traditional, closed cathedral model with the new, open bazaar model. Michael Schrage noted the importance of this phenomenon in the pages of this magazine back in 2000 (See “Open for Business,” s+b, Fourth Quarter 2000). Open source, he wrote, is “transforming how organizations of all kinds seek to create and manage value. [It] will be central to capturing more profits from innovation.” In their recent book Wikinomics (Portfolio, 2006), Don Tapscott and Anthony Williams similarly argued that peer production can help businesses “take innovation and wealth creation to new levels.”

But even as the corporate world has begun to embrace the idea of the bazaar as a forum for innovation, software programmers have continued to debate the strengths and weaknesses of peer production. The open source model has proven to be an extraordinarily powerful way to refine programs that already exist — Linux, for instance, is an elaboration of the venerable Unix operating system, and the open source Firefox browser builds on Netscape’s old Navigator — but it has proven less successful at creating exciting new programs from scratch. That fact has led some to conclude that peer production is best viewed as a means for refining the old rather than inventing the new; that it’s an optimization model more than an invention model.

Now that we’ve arrived at the 10th anniversary of the first appearance of “The Cathedral and the Bazaar,” it seems like an opportune moment to take a closer look at both the benefits and the limitations of peer production as a means of business innovation. What’s the bazaar good for, and what isn’t it good for?

strategy+business is published by the global commercial consulting firm Booz & Company.