A good reminder by Tim O'Reilly for managers of open source companies, like myself: Don't forget what differentiates you from the (non-open source) competition. What is your source of a sustainable competitive advantage?
I share Tim's concern when I look at the largest open source companies RedHat/JBoss and MySQL and wonder, whether they will be able to keep their differentiation alive as they grow further, especially since we see the IBMs and Oracles of this world adopting more and more open source practices into their business models.
However, competitive differentiation is not only for the sake of being different, but about being better in an area which really matters to your customers. It is, for instance, not of much value being different in accounting, even if you're an open source software company (at least I couldn't think of a reason). Accounting is context. There's no need to differentiate oneself in context, and it is usually good practice to outsource context on a "best practice" level. I consider sales (starting from a purchase inquiry),
(commercial) support, and G&A as context for an open source company. Those areas are pretty much the
same for us as in any other software company.
A company (only) ought to differentiate in what it considers its core business. Open source and its architecture of participation (again: Tim) is, in my opinion, mostly relevant to production and marketing:
- Production (engineering, R&D)
The way how the project sources its contributions and talent, runs its product and project management, how people collaborate in a globally distributed setup, how openness creates better quality code, and how user receive free community support, is a major source of competitive advantage:
You produce better software faster and at lower cost than your closed source competition
- Marketing
User-created content, viral marketing, and self-servicing are some aspects of what results in another major source of competitive advantage in marketing through being open source:
Lead generation cost and brand building investments are a fraction of those of a conventional software company, and as a result you can offer your products at a much lower price