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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).
- 4 -BCG-OSBC-Connections-15Mar04.ppt
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
- 5 -BCG-OSBC-Connections-15Mar04.ppt
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”
- 6 -BCG-OSBC-Connections-15Mar04.ppt
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
- 7 -BCG-OSBC-Connections-15Mar04.ppt
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”
- 8 -BCG-OSBC-Connections-15Mar04.ppt
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
- 9 -BCG-OSBC-Connections-15Mar04.ppt
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%)
- 10 -BCG-OSBC-Connections-15Mar04.ppt
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
- 11 -BCG-OSBC-Connections-15Mar04.ppt
FIRE AT THE KARIYA #1 PLANT OF AISIN SEIKI 4:18 AM February 1, 1997
Source: SMR
- 12 -BCG-OSBC-Connections-15Mar04.ppt
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
- 13 -BCG-OSBC-Connections-15Mar04.ppt
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
- 14 -BCG-OSBC-Connections-15Mar04.ppt
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
- 15 -BCG-OSBC-Connections-15Mar04.ppt
WHAT’S HAPPENING WITHIN THE TPS? (I)
OrganizationalLearning
TransactionCosts
- 16 -BCG-OSBC-Connections-15Mar04.ppt
WHAT’S HAPPENING WITHIN THE TPS? (II)
OrganizationalLearning
Trust
“Swarming”
TransactionCosts
IndividualLearning
InformationSymmetry/
Transparency
SharedMentalModels
- 17 -BCG-OSBC-Connections-15Mar04.ppt
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
OrganizationalLearning
Trust
“Swarming”
TransactionCosts
IndividualLearning
InformationSymmetry/
Transparency
SharedMentalModels
OrganizationalLearning
Trust
“Swarming”
TransactionCosts
IndividualLearning
InformationSymmetry/
Transparency
SharedMentalModels
- 18 -BCG-OSBC-Connections-15Mar04.ppt
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
- 19 -BCG-OSBC-Connections-15Mar04.ppt
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)
- 20 -BCG-OSBC-Connections-15Mar04.ppt
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
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
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
Linked to key players
Not linked to 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
- 21 -BCG-OSBC-Connections-15Mar04.ppt
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
- 22 -BCG-OSBC-Connections-15Mar04.ppt
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
25
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
?
- 23 -BCG-OSBC-Connections-15Mar04.ppt
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
- 24 -BCG-OSBC-Connections-15Mar04.ppt
“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.