T HE B OSTON C ONSULTING G ROUP MAKING CONNECTIONS Lessons From Open Source on the Power of...

THE BOSTON CONSULTING GROUP

MAKING CONNECTIONS

Lessons From Open Sourceon the Power of Networked Communities

SoftSummitSan FranciscoOctober 2005

- 2 -BCG-OSBC-Connections-15Mar04.ppt

OPEN SOURCE IS ABOUT...

Breakthrough creativity

...solving complex challenges

...by participants

• who are geographically and organizationally dispersed

• who don’t do it for direct monetary reward

• who display unusual passion for the endeavour

...in ways that compete aggressively with solutions from the most fearsome commercial vendors

The basic principles are not new. The full set of organizational lessons are very new (and still emerging).


IBM AND “VIRAL MARKETING”:UNTIL RECENTLY, AN OXYMORON


Security breach reported by sysadmin AB to MP and others. In parallel, security specialist MW emails MP about same issue. MP does 4 hours of homework

MP pulls in rsync team including AT, RR, plus Gentoo Linux and other security specialists. MP, AT and RR write patch and have it vetted by others

MP studies available data, consults with security expert DD, and engages with AB by phone

On three hours of sleep, AB digs into 8 hour forensic investigation, hands to MP

Recognized as threat to entire Linux community, any breach must be kept confidential within a trusted team

In parallel, AT writes technical announcement to WW Linux community

WW announcement out to vendor community, Slashdot, and other lists; discussion about outreach to users

Work on “honey pot” started by AB and MW

Tues, 2 Dec 200311 PM GMT

AB

MP

MW

AT

DD

RR

G2L

Slashdot

rsync Team

3 Dec4 AM 8 PMnoon

4 Dec4 AM

ABMP

G2L

DD

MWAT

RRrsync

8 AM midnight4 PM 8 AM noon

Participants

Time


MORE THAN 85,000 MESSAGES A MONTHCOORDINATE THE LINUX ENTERPRISE

Note: Number of messages posted in June 2000 on 147 relevant bulletin boards and mailing lists (duplicate postings removed)Source: deja.com; geocrawlers.com; BCG analysis

Corporate bulletin boards

1,000 Posts/month

User Development Extensions

Community bulletin boards

Corporate mailing lists

Community mailing lists

comp.os.linux.advocacy

alt.os.linux

comp.os.linux.

networkingcomp.os.linux.misc

comp.os.linux.

hardware

alt.os.linux.mandrake

linux.redhat.install

linux.redhat.misc

linux-kernel

debian-user

debian-devel

debian-devel-changes

suse-linuxsuse-

linux-eredhat-

list

alsa-devel

linux-raidlinux-newbie

suse-security

linux “beer hiking club”


OVERVIEW OF KEY FINDINGS ON HACKER MOTIVATIONS

Why shouldwe care?

High creativity

What about the community?

Strong identification Global effort Peer leadership preferred

What motivates hackers? ?

Fun, skill, freedom and need

Increasing knowledgebiggest benefit

Losing sleepbiggest cost

Who arethese guys?

0

1

2

3

4

5

6

7

8

13 16 19 22 25 28 31 34 37 40 43 46 49 52

IT professionals Generation XersVolunteer significant time


OSS MAKES A “CREATIVE CONNECTION” FOR PARTICIPANTS

Note: “...like composing poetry...” answer chosen as one of top three attitudes by participants; other answers based on degree ofparticipant agreement with statement

61.7% “This project is as (or most)creative as anything I have done”

72.6% “When I program, I lose track of time”

60.0% “With one more hour in the day, I would spend it programming”

48.4% “Like composing poetry or music”


IT’S ABOUT LEARNING, AND GETTING STUFF DONEMore So Than A Religious War

Percent of respondents

Note: Question asked for top three motivators of F/OSS participation, n=684

Intellectually stimulating

Non-work functionality

Obligation from use

Work with team

Professional status

Other

Open Source reputation

Beat proprietary software

Work functionality

Code should be open

Improves skill

License forces me to 0.2

11.1

11.0

16.3

17.5

20.3

28.5

29.7

33.1

33.8

41.3

44.9

0 10 20 30 40 50


MOTIVATIONS AND CONTRIBUTION STATUSSEGMENT HACKERS

“Community Believers” (19%)

?Do it because they feel obligation and believe

source code should be open

Do it for non-work

Do it for skill improvement and fun

Do it for work need

“Professionals” (25%)

Motivations

“Hobbyists” (27%)

“Learning & Stimulation” (29%)


IS YOUR ORGANIZATION THIS CANDID?

From: Linus Torvalds ([email protected])Date: Tue Jun 18 2002 - 19:12:45 EST Re: latest linus-2.5 BK broken

...This is not rocket science, and I find it ridiculous that you claim to worry about scaling up to thousands of CPU's, and then you try to send me absolute crap like the above which clearly is unacceptable for lots of CPU's.

No, C doesn't have built-in support for bitmap operations except on a small scale level (ie single words), and yes, clearly that's why Linux tends to prefer only small bitmaps, but NO, that does not make bitmaps evil.

Linus

From: Rusty Russell ([email protected])Date: Wed Jun 19 2002 - 10:23:53 EST

...Spinning 1000 times doesn't phase me until someone complains. Breaking userspace code does. One can be fixed if it proves to be a bottleneck. Understand?

Rusty


FIRE AT THE KARIYA #1 PLANT OF AISIN SEIKI 4:18 AM February 1, 1997

Source: SMR


Toyota

Aisin

Fire at Kariya #1 Plant – Toyota’s sole source of P-valves (for brakes)

Toyota

AisinAisin distributes blueprints, raw material, undamaged drills, and assigns staff

Aisin, Toyota and other Tier One Suppliers collaborate on an emergency production plan

Tier 2 suppliers team up, under leadership of their Tier 1’s

Entire TPS faces shutdown within 72 hours

22 of 30 plants closed; TPS self organizes to save system, e.g.• Nippon Denso volunteers as the logistics manager

Denso

• Toyota turned to its R&D prototype department• Koritsu Sangyo, a tiny Tier 2 supplier to Aisin, was first to deliver P-valves

First 1000 ‘P’ valves shipped to Toyota

Daily output of 13,000 vehicles; 62 firms manufacturing “P” valves0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Sat02/01/97

Tues04/02/97

Wed02/02/97

Mon02/10/97

Daily Production of Vehicles

KoritsuSangyo

Fri01/31/97

NipponDenso

Sat02/01/97

Wed02/05/97

Sun02/02/97

Mon02/03/97

Un

its

Source: SMR, WSJ


Phase 2: Toyota consults for free to Tier 1 suppliers (OMCD, TSSC)

Phase 1: Supplier associations for Tier 1 suppliers (kyohokai, BAMA)

TOYOTA BUILDS ITS SUPPLY CHAIN TO ENHANCENETWORK LEARNING

Common principles used in Japan and North America

Common principles used in Japan and North America

Phase 3: Nested networksand learning groups spanningTier 1 and 2 suppliers (jishyuken, PDA); interfirm employee transfers(shukko)

Source: Dyer and Nobeoka “Creating and managing high-performance knowledge-sharing network: the Toyota case” SMJ, 2000

Across the chain, Toyota builds • Affiliation, loyalty, shared goals,

mutual dependence• Open knowledge-sharing based on a

common ‘semantic’• Teaming norms • Trust that all will be treated fairly• Dense collaboration networks


TPS SUPPLIERS SELF-ORGANIZE ON MAJOR INITIATIVES Supplier Network Restructures Over Time

Toyota Encouraging Supplier Consolidation, Collaboration

Recent projects

• Interior parts and seats (in discussion, August 2003)

• Brake products: ADVICS (July 2001)

• Plastic fuel tanks: FTS (Feb 2002)

• Electronic power steering (Nov 2002)

• Map databases: Toyota Mapmaster (1998)

Development/production collaboration

• Safety systems (airbags, seatbelts)

• Engine parts (throttle bodies, injectors)

• Pistons

Production, business transfer and consolidation

• A/C compressors

• Anti-vibration rubber

Toyota’s Tier One Supplier Network Increasingly Interconnected

Note: This network map is partial representation of existing TPS collaborationsSource: Morgan Stanley, August 21, 2003

Recent changes

In negotiation August 2003


WHAT’S HAPPENING WITHIN THE TPS? (I)

OrganizationalLearning

TransactionCosts


WHAT’S HAPPENING WITHIN THE TPS? (II)


Trust

“Swarming”

TransactionCosts

IndividualLearning

InformationSymmetry/

Transparency

SharedMentalModels


WHAT’S HAPPENING WITHIN THE TPS? (III)

“It’s the work, stupid”

All work is an experiment

Standardized documentation

Leaders as mentors in the work

Systemic “voltage” generation (pull, JIT, balance)

Accumulate personal knowledge of work and norms

Standardized interactions

Long term relationships

Open knowledge sharing

Discretionary “voltage” directed by leadership

Stability and consistency of application of mechanisms

Individual Learning Principles

System oriented principles


Trust

“Swarming”

TransactionCosts

IndividualLearning


Transparency

SharedMentalModels


Trust

“Swarming”

TransactionCosts

IndividualLearning


Transparency

SharedMentalModels


THE NETWORK LENS:MAKING THE INVISIBLE VISIBLE

Traditional views

Matrix

Org. chart

Network analysis view

Consumer

FS

HC CD

IT

Operations

Org

Strategy

IG

Energy

TC


Example of attending and referring physicians

High variation in number of referrals made by physicians

Uncertainty about high leverage marketing targets

Situation

Network shows key “catchers” and “pitchers” of referrals

Hospital currently reviewing referral process

Possible marketing vehicle for pharma

Insight, Impact

Source: BCG analysis

KEY PLAYERS BECOME APPARENT IN PHYSICIAN REFERRAL NETWORK

Attending physician (~250 referrals received)

Referring physician (~250 referrals made)


KEY OPINION LEADERS IN MEDICAL MARKET

Declining return on marketing spend in complex medical market

Uncertainty about how to decide on who to influence and how

Situation

Patterns of influence across KOLs identified and optimal influence team identified

Current client position assessed and marketing spend focused and optimized

Insight, Impact

Link “within” groups of nodes

Links from key players tonodes outside of key players

Non-reciprocated links to key players

Linked to key players

Not linked to key players

Key players

Thomas Q

Boldin A

Beem N

Hamilton E

Ling T

Smith J

Jones G

Weir B

Lewis J

George E

Brady M

Mason D

Rice R

Owens J

Garner C

Holmes P

Gunter SCline J

Danner J

Upson T

Johnson B

Gore B

Hannah MNoble J

Campbell F

Morgan Q

Reed J

Stewart K

Taylor C

Finneran B

Moss S

Victor JChen R

Ma D

Gupta R

Ogden R

Schaub M

Lundy M Moore R

Cink R

Montgomery F

Cruz L

Lopez G

Mitchell F

Steinberg J

Goldberg W

Branch K

Glenn T

Porter W

Blake O

Peete V

Martinez D

Hunter D

Blackburn D

White B

Green T

Brown J

Jackson R

Hutchinson T

Marshall P

Berg D

McSpadden C






Key players






Key players



Key players

Thomas Q

Boldin A

Beem N

Hamilton E

Ling T

Thomas Q

Boldin A

Beem N

Hamilton E

Ling T

Smith J

Jones G

Weir B

Lewis J

George E

Brady M

Mason D

Rice R

Owens J

Garner C

Holmes P

Gunter SCline J

Danner J

Upson T

Johnson B

Gore B

Hannah MNoble J

Campbell F

Morgan Q

Reed J

Stewart K

Taylor C

Finneran B

Moss S

Victor JChen R

Ma D

Gupta R

Ogden R

Schaub M

Lundy M Moore R

Cink R

Montgomery F

Cruz L

Lopez G

Mitchell F

Steinberg J

Goldberg W

Branch K

Glenn T

Porter W

Blake O

Peete V

Martinez D

Hunter D

Blackburn D

White B

Green T

Brown J

Jackson R

Hutchinson T

Marshall P

Berg D

McSpadden C

Smith J

Jones G

Weir B

Lewis J

George E

Brady M

Mason D

Rice R

Owens J

Garner C

Holmes P

Gunter SCline J

Danner J

Upson T

Johnson B

Gore B

Hannah MNoble J

Campbell F

Morgan Q

Reed J

Stewart K

Taylor C

Finneran B

Moss S

Victor JChen R

Ma D

Gupta R

Ogden R

Schaub M

Lundy M Moore R

Cink R

Montgomery F

Cruz L

Lopez G

Mitchell F

Steinberg J

Goldberg W

Branch K

Glenn T

Porter W

Blake O

Peete V

Martinez D

Hunter D

Blackburn D

White B

Green T

Brown J

Jackson R

Hutchinson T

Marshall P

Berg D

McSpadden C


TELECOM REVIEWING SALES FORCE EFFECTIVENESSFOR EFFICIENCY IMPROVEMENTS

High variation in attrition rates among sales force reps

Network analysis conducted on hiring patterns of managers

Situation

Evidence suggests that certain sales reps. gaming the hiring system to achieve bonus quotas

Company modified incentive compensation system to account for “gaming” factors

Insight, Impact

Example of sales reps(linked by who hired them)

Manager: A B C

Cancelled reps: 41% 78% 95%

Active reps: 59% 22% 5%

AB

C

Source: BCG analysis


AN APPROACH TO NETWORK ANALYSIS Five Step Process

Methodology

1. Develop lay of the land

2. Define the measurement plan

3. Build the fact base

4. Create the diagnostic

5. Launch the network transformation

Objective

• Define network aspirations (i.e. “good” collaboration) and characteristics which promote it

• Determine methods to observe and measure interactions that define “good” collaboration

• Map networks and analyze quantitative network performance metrics

• Synthesize analysis to assess overall network performance and develop action plan to pursue opportunities

• Design and implement new business processes to foster the network characteristics recommended

-25

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1992

1994

1996

1998

2000

2002

-25-15-5515253545

1992

1994

1996

1998

2000

2002

-25

25

1992

1994

1996

1998

2000

2002

-25

25

1992

1994

1996

1998

2000

2002

?


WHERE TO START?Candidates For Networked Community Action

Look for target problems or projects:

• That have a clear, valuable objective

• Where individual action can make a difference

• That will benefit from “lots of eyes”

• Cross organization boundaries

A few ideas to consider:

• Your product support knowledge base

• IT or technology standards

• Your IT application portfolio


“OPEN SOURCE” PILOT CHECK LIST

Global goal : A compelling, collective vision

Individual goals: “It’s the work, stupid”

Peer leadership: Fact-based, passionate, open, accountable

Modularity: “Chunks” where individuals can make a difference

Connectivity: Connections across silos

Work norms: Disciplined, fact-based interaction around the workRelease early/release oftenOpenness

Work space: Activity must exist where individuals work

“Call to arms”: Why this effort, why us, why nowGet started. Learn by doing.Get started. Learn by doing.

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