Lean by Design

Mixed information has come out this week over Cisco’s plans with respect to their CTA (Cisco Trusted Agent) security product. Earlier in the week the CTO of Cisco’s security products group announced that they were planning to Open Source the product. That report was then vigorously denied by Neil Wu Becker, PR Manager, Security Cisco. Neil stated “Cisco is NOT open-sourcing CTA, nor do we have any plan to do so. We’re not even considering it — it’s not something on our radar and it’s not a pressing issue on our agenda.”

Wow, some very mixed messages! This apparent about-face by Cisco is an example of the difficulties that the company has had in dealing with the potential of Open Source business models. Although Cisco does make use of some Open Source software in their products, they have not embraced the model, nor have they adopted any true Open Source product strategies to my knowledge. Another example of Cisco flip flopping on Open Source can be seen in how they dealt with the Linksys acquisition.

This failure to fully leverage Open System business models (Open Source and Open APIs), is not unique to Cisco. In fact none of the large vendors has successfully embraced this strategy. Perhaps the main reasons for this is that Open Source – if it is understood at all – is seen as primarily either:

1. a source of inexpensive software. Now, if you are a consumer of the software/data, this is a good thing. But if you are a provider, then you can expect product margins to be smaller. This explains the obvious reasons for many companies to first utilize Open Source and Open APIs in the mode of consumer, rather than provider. I would however, argue that lower margins are not necessarily the outcome of Open Source strategies, but they are most certainly a risk that needs to be thoughtfully managed.
2. for the more enlightened,Open Systems (specifically Open Source) may be seen as a means to disrupt the status quo and to undermine a competitor’s value proposition. Viewed thru this lens you wouldn’t expect the established companies like Cisco to rush into adopting these strategies.
An important additional benefit of Open System strategies is often overlooked, and that is; the increased product reach that can be achieved for your product. By offering the customer greater control over any resulting solutions, as well as the opportunity to build onto your value chain, Open Systems can enable others to address additional needs in unforeseen ways. In this way one can greatly increase the addressable market and dramatically increase the rate of market acceptance via the network affect.