What the economy can learn from open source communities!

2015 was something of a wake-up call in terms of digital transformation. Even for those who usually like to sleep longer. The conventional wisdom is that we are already in the middle of this digital transformation. But I believe we are only at the beginning.

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Two-part digital transformation

I think the digital transformation as we see it today has two fundamental components:

Digitization of existing products

This part is about transferring an existing model to digital. A classic example: the retailer now also sells online. It is, so to speak, a first approach to the new habits of a society that is changing through technology. We are actually making good progress in this area. Many companies are making the necessary investments and are managing to create a customer experience that helps customers. However, this (almost) 1:1 adoption of “tried and tested” processes rarely results in truly new opportunities. It is, so to speak, a compulsory exercise that prevents companies from falling behind in the market.

Fundamental change in models due to new technological possibilities

Things get really interesting when existing systems are fundamentally rethought. When the new technological possibilities are used to develop new business models. This is not new wine in old bottles, but new wine in new bottles. We all know these comparisons from Airbnb and Hilton, for example. Available rooms and overnight stays are compared and the statement is made that Airbnb only took a few years to build up and doesn’t even own a single hotel property. These comparisons are funny but the typical apples and oranges comparison. Because we are talking about completely different models that are not comparable per se.

Communities at the heart of the new models

I’ve been part of the TYPO3 community for a few years now. It is one of the few free and self-organized, large software communities. The longer I deal with new business models, the more I think that communities are the key to them. I have described how communities are structured in more detail here. You can find these structures in all “Communities of Interest”

Away from product thinking towards “community of interest”

I don’t think the classic “company X produces and sells product A, customer Y buys and consumes” is dead. However, I think that as soon as possible, companies should no longer see themselves as producers of products, but as service providers to the community of interest in which they operate.

That changes a whole lot. Because it focuses companies on customers’ problems and concerns. When the primary focus is no longer on developing and selling a product, but on solving the problems of community members, new models emerge.

Perhaps, as in the case of Airbnb, it will be recognized that it is enough to combine one community of interest with another. Or to help a free open source product to be better adapted in the market. Admittedly, this is not easy. The paradigm shift, but also seeing these opportunities and developing revenue streams that really work.

4/6/8 P is dead

I can literally hear the outcry. Traditional marketing concepts focus on the market and the product as core variables. You develop truly resounding digitalized business models along your communities by radically aligning yourself with the needs of the community members.

If you approach your marketing activities with this attitude, stop annoying your customers with advertising, persuading them to make “impulse purchases” and “strengthening your brand with branding campaigns”. No, your activities serve the common goal and therefore each individual. And you will automatically be perceived as friendly support.

As part of the community. They are suddenly on an equal footing with community members. That’s why these new players are gaining so much sympathy in addition to economic success.

Serving a higher cause

Our economies are less and less about seeing companies as an end in themselves. The really interesting companies essentially pursue the goal of solving social problems. We are slowly moving away from this shareholder mindset because there is a widespread realization that it is not getting us anywhere as a society.

It is significant that the companies and entrepreneurs who are most successful in business today are not pursuing economic goals per se.

In an economic world focused on maximizing the banal, they are so extremely successful precisely because they do not. The great entrepreneurs, past and present, see business as the duty of society, and not the other way around.

Open source and communities of interest

And this is where open source plays a decisive role as a fundamental principle for sharing information within the community of interest. Because if information is available to a broad mass of members, the entire community can move forward. The Internet has made a huge contribution to this in recent years.

And don’t think about complex, supposedly high-value information, but stick to the banal, such as product information. The availability of this knowledge enables customers to make better purchasing decisions, which leads to the discontinuation of bad products on the one hand and the creation of new products that meet new requirements on the other. Without this exchange of information, the incentive to create fundamentally new and better products would be far less great.

Peer research

Making all relevant information freely accessible is crucial for our society. The economic system does not yet fit in well with this. Research, i.e. the development of relevant knowledge, costs a lot of money and the only way to recoup this money at the moment is to use it to build a product. And to protect the knowledge commercially through patents.

However, this process significantly hinders progress. In future, it will be important to find ways to carry out research work collaboratively. What works quite well in the creation of software in open source communities, this peer production, can certainly also be applied to research. It distributes the costs of research among as many parties as necessary until these costs become affordable. Individuals can recoup the costs of research individually or collectively by utilizing the freely available information.

This is a paradigm shift. The open source communities, which have become much more commercialized in recent years, show how this can be done.

“Data/information is the new oil”

I think this statement is fundamentally wrong for the reasons explained above. It stems from the fact that people apply these “company -> customers” models 1:1 to the digital age. But what we are actually seeing is that more information is freely available than ever before. And this trend will continue, even if there are laws and regulations that still hinder this for reasons of structural preservation.

During the digital transformation of your company, try to find out which community of interest you are part of. And ask yourself the question: “What is our contribution to serving this community?”. Then consider all the technological possibilities and you are already well on your way. Then you just have to do it :-)