Chapters 3 & 4Chapters 3 & 4By Team Wiki

Peer ProductionA new way of producing goods and services that

harnesses the power of mass collaboration.Emerging as an alternative model of production that6

can harness human skill, ingenuity, and intelligence more efficiently and effectively than traditional firms.

“Peer Pioneers” are the people who brought open source software and Wikipedia.

Companies that recognize, address, and learn to tap peer production will benefit, while those that ignore and resist will miss important opportunities for innovation and cost reduction, and may even go out of business

A New Mode of ProductionPeer ProductionLicensingParticipationPeering

Peer ProductionIt is a way of producing goods and service that

relies entirely on self-organizing, egalitarian communities of individuals who come together voluntarily to produce a shared outcome.

Peering allows the assignment of the right person to the right task more effectively than traditional firms because of self-selectionPeople voluntarily self-select tasks that they are uniquely

qualified for.People do projects where they have expertise and interest.

LicensingTraditional forms of intellectual property

confer the right to exclude others from using or distributing a creative work.

Peer production is the opposite.Guarantees users the right to share and modify

creative works provided that any modifications are shared with the community.

ParticipationWhy do people participate in work for no

pay off?Software engineers love solving technical problems – it

drives them.People who participate in peer production communities

LOVE IT. They are passionate about an area of expertise and

want to create new and better thingsSome participate, in Linux for example, to get

experience, exposure, connections, and if they are good, they can earn status within the community – which can be highly valuable in careers.

How Peering Works Best1. The object of production is information

or culture.2. Tasks can be chunked out into bite-size

pieces than individuals can contribute small increments and independently of other producers.

3. The costs of integrating those pieces into a finished end product must be low.

WikipediaExample of peer productionLargest encyclopedia in the world – is free

and created by volunteersAnyone can be an editor.What Drives Editors

People are passionate about their topics, and they want the world to know about it.

Wikipedia Division of LaborDuties include administering pages, developing

software, finding copyright-free photos, moderating conflicts, and patrolling for vandalism

Only 5 paid staffers Volunteers perform most maintenance.

Each Wikipedia article has been edited an average of 20 times

50% of edits are made by less than 1% of users.Occasional “edit wars” break out – where users

repeatedly reverse other user’s changes. Wikipedia staffers make the final judgment.

Encyclopedia BritanicaWikipedia has 4 mistakes to Britannica’s 3.

Difference is Wikipedia has since corrected those mistakes where Britannica cannot until the next edition.

According to an MIT study, an obscenity randomly inserted on Wikipedia is removed in an average of 1.7 minutes.

Average of 2,000 new articles posted daily 730,000 each year

Wikipedia’s possibility of publishing Dictionaries, textbooks, news, free-content libraries

Spin-off book possibilities: The Wikipedia Guide to Rock and Roll Wikipedia’s History of World War II

Books to be written by users – profits would be rolled back into the technology and Wikipedia community.

Linux and Open Source SoftwareIBM was hesitant to get into Linux and other

open source softwareStarted with Apache Web Server

(Success)Joined Linux

Donated code to open-source community Employees forced to work on Linux development

Encouraged to do the nuisance work that no one else wanted to volunteer for.

Raised profit in support and consulting

Embracing Open source culture and strategy

Play to your weaknessTake a balanced approachAdapt to community norms and clock

speedsDo not try to lead until you have built

credibility in the community.Do not criticize

Make it a priority.

Wikipedia London ExampleOn July 7, 2005 London, England suffered

from four synchronized bombings in the transportation system.

Media outlets scrambled to cover the storyThe 1st entry appeared on Wikipedia only 18

minutes after the bombings Minutes later, other members of the community

were adding additional information and correcting existing information.

The next day over 2,500 people had created a comprehensive 14 page account of the events – more than any other media source.

Wiki-Open Source Text booksThe California Department of Education

California Open Source Textbook Project Runs the same software that powers Wikipedia IBM, Sun, and top universities such as MIT are

developing free open source educational materials that anyone can use and large communities of educators can improve

Could save local tax payers over $400 million every year.

Wikipedia's Bad RepMay 2005 an anonymous user posted an

article about John Seigenthaler, Sr. Stated that he was a suspect in the Kennedy

assassination Completely false 4 months before anyone realized it was a bogus

article

Some professors argue students can write their own Wikipedia article, then use it as a reference. Not a valid source for research papers.

Joining LinuxIn 1999, IBM faced challenges:

Dell - Low-end Hardware Microsoft - Operating System

Linux offered solutions: Scalable operating system

Worked well on small servers Could grow to handle heavier tasks

Joining Linux IBM formed a Linux Development group

Differences in Culture and in the Process They run on instantaneous communication

Instant messaging E-mail Message Boards

Software Design Phases Still: Design, Develop, Test, and Maintain Focus more on: implementation, testing, and support Less time is spent on user requirements and design

specifications. Planning and Coding

In IBM, planning and coding can take months for a single line of code

In Linux, an individual writes code and can publishes it daily. Which allows the community to test and fix the product

continually Still leaving the product “in development” after its “released”

Joining LinuxOutcomes:

IBM spends/invests about $100 million per year on general Linux Development

The Linux community puts in $1 billion of effort

IBM gained a viable alternative to the Windows server

IBM gained experience and knowledge in this new model of value creation. The open source community is a positive force

Embracing Open Source Culture and StrategyConsiderations before using Collaborative

Outsourcing: Collaborative outsourcing will work best in

areas not core to your product or central to your business model.

Look for areas where your market efforts have floundered

Can your goals be met better by joining an existing community instead of on your own? Therefore collaborative outsourcing may be a

cheaper option

Embracing Open Source Culture and StrategyConsiderations before using Collaborative

Outsourcing:Adapt to community norms

Do not lead until you have established credibility in the community (observe hierarchical process)

Make the Open Source community a priority Always remember to balance what you receive and

what you give back to the community.

Embracing Open Source Culture and StrategyIs it possible for all software to be peer

produced? Linus states that the “Open source community

could create almost any software, expect for small niches where it might be too difficult to bring a community together.”

Cost Advantages to Open Source:Less need for salespeople, marketing, or engineers

The community will help produce, debug, and evangelize the software

Downloadable free trialsSpent money usually goes into developing value-

added features and services.

The Key Benefits of Peer ProductionHarness External Talent

Peer production uses more people and partners in developing solutions and innovations.

Keep up with Users If you do not keep up with your user needs, they

can go elsewhere (even event around you), which creates more competition.

Boost Demand for Complementary OfferingsParticipating in Peer Production communities

can boost demand for complementary offerings, instead use this as a new opportunity to add value.

The Key Benefits of Peer ProductionReduce Costs

Companies collaborating in open source communities have produced more robust, fault-tolerant products in less-time and for less than the conventional in-house approach.

Shifting the Locus of CompetitionAs opposed to core Intellectual Property,

publishing non-core Intellectual property can enable one to change the locus of competition from operating systems to applications, integration, and services.

The Key Benefits of Peer ProductionTaking the Friction out of Collaboration

Open source innovations cut down on the friction of collaboration, and also have generally less concerns over public disclosure of proprietary information.

Developing Social CapitalCompanies like IBM develop social capital in the

peer production community by granting the open source communities royalty-free access to their patents. Therefore, they obtain a “license to operate” so that they can harvest some of the value created in collaboration with community members.

Managing Open Source ComplexityThe Three Rules to Open Source

Nobody owns it Everybody uses it Anybody can improve on it

Kim Polese, CEO of SpikeSource, sees this infrastructure as a way to help run tens of thousands of different tests across the different components, OS, and different languages.Open Source Tests results:

Compatibility/Integration with established OS Reliability Support

The Future of Open SourceThe Open Source purists worry that a growing

number of for-profit ventures could extinguish the ethics of sharing and openness of the open source community’s value system.

Changes in For-ProfitBusiness no longer try to capture the customer, and lock

them into a platform (while also locking out the competition).

Now their creating ways for your software to integrate and work better with everyone else’s software.

Software is now better in features and value (maintenance and support)

Why the Open Source Critics are WrongCritics of open source state that eventually open

source will make it no longer clear who owns what or how individuals and companies will profit from their creations.

Profiting from peer production communities may never be a direct or straightforward solution. Supporters say that if open source cuts down on monopolies and if open source systems had been of value, then they would have not made such a big impact when compared to Sun or Microsoft. Also, without open source many smaller companies would not be able to buy the higher infrastructures made available through open source.

Peer Production is here to StayPeer Production levers basic human motivations

to turn work into substantial economic value.All companies need to see how Peer Production

innovation and production might be introduced into their industries and what its economic impacts will be.

Peer Production communities will not undermine an existing business model. Peer Production collaborative networks can instead help build a cultural and strategic capability for companies to leverage production.