Subject: Re: Successful FSBs
From: "Benjamin J. Tilly " <>
Date: Mon, 28 Oct 2002 19:25:57 +0500

"Tim O'Reilly" <> wrote:
> On 10/27/02 12:59 PM, "Benjamin J. Tilly" <> wrote:
> > This is great for most of us.  But why should ANY
> > established business which understands Clayton
> > Christensen's thesis not see this as a damned good
> > reason to run screaming in terror from free software?
> Well, if someone else is going to do it to you anyway, better to be in the
> driver's seat, especially if you think through the long term consequences.

That theory depends on two big assumptions.  The first is
that you think that you can get into the driver's seat.
The second is that the timing of events is irrelevant.

Both are questionable.  Attempts to "drive" free software
projects have mixed success.  And there is something to
be said, when facing doom, to delay that doom a bit more
so that you can get into a safer line of business.

> If IBM had understood what they'd unleashed with the commodity hardware of
> the PC, they could have become both Dell (the company that best realized the
> low-cost potential of commodity hardware) and Microsoft (the company that
> best realized the profit potential of monopoly software on top of that
> commodity hardware platform).  Not to mention Intel.  But they turned the
> genie loose and let someone else realize its potential.

I am sure that there is some nice Latin phrase for the
fallacy that you just committed.  But I don't know Latin,
and I don't know the phrase.

First of all that is like asking Linus Torvalds whether
he wishes that he had kept Linux proprietary and made
money from it.  In hindsight the project was a success.
But it would never have succeeded if he had maintained
control.  And likewise the commodity dynamics that made
the PC what it is wouldn't have worked if IBM had tried
to drive all sides of the bargain at once.

Secondly you are ignoring an important point that
Christensen made, which is probably a standard piece of
knowledge from some business classic that I don't know
about but should.  (References appreciated, I have seen
similar points elsewhere.)  And that point is that the
structure of an organization defines both its abilities
AND disabilities.  The kind of corporate culture and
organization that drives Dell's commodity model also
makes it incompetent at taking routing big long-term
risks.  Conversely Microsoft can take that long-term
view, but could never compete with Dell in a
cost-concious cookie-cutter environment.  These need to
be separate organizations with radically different
structures to succeed.  It is therefore disingenuous to
say that if only IBM knew better they could have taken
advantage of every opportunity arising out of the PC
when what you have to do to take advantage of one option
necessarily makes you incompetent at taking advantage of
the third.

And last, but not least, for each winner that we know
about there are many losers.  It is tempting to think
that support from a parent company can load the dice.
But for reasons that Christensen gave, attempts to load
the dice tend to backfire.  (Bob Young used to have a
great speech comparing how Red Hat and Caldera started
which illustrated this for me.  And the latter third of
_The Millionaire Next Door_ shows the same dynamic in a
different context.)  If the market lends itself to
having several winners, then the gamble is not so bad.
If the market lends itself to winner take all, then that
is a very dangerous and psychologically hard risk to
take, even if it is justified.

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