Michael L. Katz is a Berkeley business professor with no particular union card in the Open Source movement. Professor Katz has another kind of union card that he gets to flash frequently, in academia and in world business meetings. That is his ability to think expertly in his field of economics and to deliver expert assessments of how organizations win and lose in behaviors and strategies. He's a well-known expert in telecommunications policy-he was chief economist at the FCC-and he has published widely.
So when we heard he had gone to this year's World Economic Forum summit to present "Open Source as a Model for Organizations of the Future," we promptly asked Katz what made him focus on Open Source. He laughed.
He wasn't laughing at me. He wasn't laughing at anyone. Not even at the World Economic Forum. It's just that the invitation to Davos surprised him somewhat. "Well, Open Source is something I've followed, but they invited me because I have done work on intellectual property and alliances in general," he said.
The World Economic Forum organizers, staging the annual global winter summit where thought leaders in politics, economics, technology, and business converge to share problems and solutions, knew exactly what they were doing. They actually had a point. The audience of CEOs could benefit by listening to a thinker who already understood how they behave, flounder, and advance.
Understanding their mindset and histories, he could make some realistic, easily translatable assessments of how Open Source might affect the way they can model themselves in the not-so-distant future. Katz is talking about Open Source's social mechanism, an important lesson for corporations in their search for effective ways to motivate people. How did Michael Katz proceed?
"I noted what Open Source means on a number of levels, in light of software development and as a broader movement," he said. "One key view of Open Source is motivating people through direct recognition amongst their peers."
| Touchpoint: Direct Recognition |
| Direct recognition is real fodder for business, says Katz. For purposes of contrast, he talks about the "Old Economy," where employers use salary hikes as a form of recognition. In the Open Source world, the payoff instead is direct recognition among peers. "Praise for a bug fix, not a salary increase, becomes the motivator." The developer's endgame is profit with a difference. The developer might use praise as ammunition with which to advance in professional circles. Katz observes how logs in the Open Source world that credit contributors and cite who does what can play an important role in corporate behavior. "You can imagine Intranets carrying details of people's accomplishments, citing project credits. The Open Source feature of recognition has some interesting possibilities." |
| Touchpoint: Information Sharing |
| Another point about Open Source is that you let people see your work rather than bask in sole pride of authorship. Come on, we ask Prof. Katz-who has, after all, watched corporate behavior for years-is this anything new?
"No. One pharmaceutical industry study, for example, found that those companies that were less concerned about secrecy had more productive labs." Another example is found in steel mills. "There was the industry practice of running factory tours," he continues, "where the competition could view your operations. It wasn't a formal consortium, but an informal industry practice. In that way, it is like Open Source, as an information-exchange process is going on."
What, if anything, is new? Katz says the significant point is that companies continue to debate ways in which intellectual property helps and hurts profitability. And, he adds, this will get more interesting. "We will see how the Open Source influence will promote thinking in opening up business processes and getting large numbers of people taking authorship, working on something as a group."
Katz sees a number of changes in the wings: Large yet decentralized teams. Self-organizing groups. Corporate rethinks of how sharing intellectual property will enhance competitive standing.
"Overall, corporations will view the different features of Open Source to ask how these features apply. This is what my address at Davos sought to accomplish: to say, here are some intriguing features of Open Source, and let's think about how these will translate."
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| Touchpoint: Product Improvements |
| What fascinates Katz are parallels between Open Source's information-sharing traits carried over to how corporations seek benefits from customer interactions. "Open Source community contributors look at the product and say, 'here's the fix.' I've seen that successfully work in aircraft manufacturing. An airline will give them back a redesigned part." Katz looks at industries where manufacturers not only talk to their customers but let the customers have a say in how the product is made. This might be a strong harbinger of the organization of the future, where customers take the lead in providing valuable information on products that can sell.
"Companies selling to sophisticated customers might do more to work with those customers. With changes in information technology, we're pushing the boundaries of imagination." Even looking back at the transition from clerk-based markets to self-service supermarkets, he recalls that, in sheer terms of profitability, "self-service was a brilliant concept. Now customers were doing their own order fullfillment." The challenge of the future, he states, is to look upon customers as Open Source looks at its community, to ask "if there is expertise among customers."
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| Touchpoint:Knowledge Management, Phase Two |
| Business leaders at last year's World Economic Forum were engrossed by knowledge management. If knowledge management was the buzzword in corporate circles, it was also a major corporate strategy for good reason: How a corporation managed and shared information affected how it could compete. Small wonder, concedes Katz, that interest is growing in Open Source and its behaviorial impact. Any phenomenon dealing with the way corporate leaders can improve organizational behavior is going to fill seats. The topic is as difficult as it is interesting. "A lot of companies are not satisfied with their knowledge-management projects," says Katz. "Knowledge management is inherently hard, in how to codify passive knowledge and distribute it to people."
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-Michael Katz is Edward J.and Mollie Arnold Professor of Business Administration at the Haas School of Business at the University of California at Berkeley. He taught economics at Princeton and served as chief economist for the FCC during 1994-1996.
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