Today's academics and business professors are constantly reminding us of Schumpeter's work (Hamel 1998), the need to re-invent your industry or to change the rules of your game (Markides 1998). These essential strategies for today's competitive and innovative companies have typically been found in the software manufacturing industry; with such profit-seeking corporations as Microsoft, IBM, Cisco systems and Sun Microsystems. However in the early 1990's a new organisational form embracing the open-source movement radically challenged the supremacy of large multinationals; this organisation is called Linux. The software industry typically sees new organisational forms occurring quickly and establishing strong market dominance, however Linux went against many of the traditional concepts typically thought of as the norm in the software industry. This paper will establish the development of Linux, complexity theory and its relationship to Linux, the Linux business model, rules governing Linux and the possible lessons that future managers can learn. Comprehensive ranges of secondary sources have been used to compile a detailed but accurate picture of this fascinating story of Linux.

The very origins of Linux lie in the open-source model created by Richard Stallman, who in the early 1980's when working at MIT became extremely unhappy with the proprietary approach to software development. Stallman found that when he was trying to develop new software for Xerox printers, Xerox refused to provide the vital source code making modification extremely difficult. Stallman saw the future of software manufacturing as taking this very industrialist approach whereby large software manufacturers kept their vital source code (product knowledge) from their customers/competitors in order to gain competitive advantage and standardisation. Stallman believed that the source code should be freely available and soon left his job at MIT and developed his own project called GNU with a free operating code using a specific variation of Unix. Open-source was born whereby the source-code would be provided with the operating platform and 'copy-left' was introduced where 'copyrighting a program and then adding specific distribution terms that give everyone the right to use, modify and distribute the code' (Lighthouse case Study 1999). Stallman saw the development of software as a public utility not one which is dominated by public companies - who didn't always produce the most functional software.

Linus Torvalds first discovered a Unix like program called Minix while studying at University in Helsinki, Finland.  Linus posted his new Unix-like kernel on the Internet and asked for suggestions on what people 'disliked/liked about Minix...and for any practical solutions' (Moody 2001),’ whilst maintaining that the operating system was free. At this stage the Linux community was created and as a result of which actors in the community could communicate to Linus via the technological infrastructure of the Internet.  Ironically the success of Linux as an open source project was heavily dependent on another open source project for its success the Internet. 'The World Wide Web has made it possible to implement virtually any conceivable scheme for organising Linux information' (Browne 1997). The following diagram shows why:

Traditional companies often have to compromise between the richness (quality of information) and the reach of information (number of people reached). However the Internet and most specifically the proliferation of e-mail ensured that the trade-off between the richness and reach was minimal as the diagram depicts. Therefore actors in the Linux community could be in Brazil, America or Europe and still be exchanging highly detailed information 24 hours a day, seven days a week and, most importantly, when they felt motivated.

The open source movement within the Linux community supported by the Internet enabled more and more hackers to contribute to the Linux project and ultimately adding more lines of code to the Linux kernel. As the community grew so did the reliability, functionality, complexity and commercial suitability of the Linux operating code. However the open source movement and the social co-ordination of the Linux project meant that individuals were more interested in personnel reputation and open source ideologies of the hacker community rather than personal financial gains. The open source movement is highly visible and individual hackers are mainly motivated by 'developing a name for themselves or enhancing a reputation...In gift cultures social status is not determined by what you control but what you give away...open source hackers are in fact a gift culture' (Lynne, Brook, Agres 2000). This led to one of the main advantages Linux had over contemporary software manufacturers in that millions of similar like-minded individuals can add to the community with different perspectives increasing the probability that any bugs will be fixed through incremental improvements. The following diagram depicts the virtuous value chain within Linux from the release of the operating code to evolutionary, self-organising cycle that makes the Linux open source community so formidable.

Although open-source is represented as a perfect model it does have certain problems, namely forking where two open-source contributors have different beliefs and think the movement should alter direction. Another serious consideration is the rising management costs as the movement increases in size and complexity. However as long as the movement can stay focused and ultimately ahead of its competitors in terms of innovation and product development the community will continue to be successful.

The fitness landscape refers to the ability of Linux to find the best operating code, but with too much order typically found in Propriety Company can result in failure, as with too much sporadic disorder. Linux rests on the edge of chaos 'a condition not a location' (Pascale, Millemann, Gioja 2000) as the combination of constant experimentation and parallel searching ensures 'multitudes of actors pursuing their visions simultaneously...allowing a much greater exploration of a problem-scape for a global summit...what amounts to parallel evolution' (Kuwabara 2000). Although this model seems highly theoretical it has sound underpinnings that have vital relevance to the evolutionary structure that the Linux project has undertaken. The edge is constantly changing and innovation rarely emerges from stasis or chaos, indeed most of the creativity in nature is produced at the edge of chaos. Ultimately the vast number of actors within the community enables the Linux project to explore a enormous number of landscapes far quicker than a single organisation. Modularity is another essential element of Linux. Linus only controls final edits for kernel improvements due mainly to time constraints and the benefits of a modular structure. Instead he has a core of highly experienced but close colleges who undertake specific developments that are continuously evolving but interacting towards the single kernel. This adds to the overall innovative capacity of the project as 'modularisation is commonly seen as a key to effective software development...some modules disappear in the course of evolution. According to Schumpeter (1975), 'innovation produces creative destruction' (Tuomi 2001).

Whatever the state of the GNU-Linux Kernel in 2010 its inherent evolution will lie at the heart of the heterogeneous mix of hackers that made the Linux kernel so powerfully competitive against proprietary companies such as Microsoft. Some of the main differences in the business models of Microsoft and Linux were described in a book called the Cathedral and Bazaar by Eric Raymond. Some of the most important differences have already been mentioned, in the ability to modularise whilst continuing parallel development. Other crucial differences appear in the sense that the Linux community was a self-organising system, compared to the closed hierarchical system of Microsoft as depicted in the Cathedral and Bazaar; "The Linux world behaves in many respects like a free market or ecology, a collection of selfish agents attempting to maximise utility which in the process produces a self correcting spontaneous order more elaborate and efficient than amount of central planning" (Raymond 1998). As previously mentioned the ability to change the rules in one's markets is sometimes the only way to change market methodologies and this is encapsulated by Raymond. "Linux was the first project to make a conscious and successful effort to use the entire world as a talent pool...Linus was the first person to play by new rules" (Raymond 1998). The management structure in Linux is somewhat different to Microsoft in that Linux consists of Linus Torvalds, then his core module workers (selected on reputation and ability), then the massive pool of talent connected by the internet - compared to rigid and departmental structure of Microsoft. Although some could argue Linus has overwhelming control of Linux (and this caused a possible fork in 1998) he is there because of his own reputation and ability to communicate with individuals throughout the community. As Raymond states " a bazaar project leader or co-ordinator must have good people and communication skills". Crucially the main difference between the cathedral and the bazaar is the ability for the Linux community to constantly release new up-to-date beta codes "early and frequent releases are critical part of the Linux Development" (Raymond 1998). Compare this to the cathedral thinking: let as few bugs as possible be shown and these can be corrections in the next version. Raymond delicately states Linux's main advantage as "given enough eyeballs all bugs are shallow" (Raymond 1998).

• The Linux Rules
  
  

  -Open-source community values can create a highly innovative and knowledge creating system.
  -Use the whole world as your resource base - knowledge creation will follow.
  -Financial rewards and targets are not motivators - self-reputation, community rules and willingness to give are.
  -Virtual organisation can exist and create highly complex structures and products.
  -Release early and release quickly.
  -Don’t have a controlled and planned system – let individual actors interact under unified rules and self-organisation will create something special.
  -Modularisation is a highly effective mechanism for generating the best software 'an ecology of developers' (Tuomi, 2001).
  -Parallel development can create the quickest and most efficient bug solutions. 
  -Know when to let the commercial world have their benefit.
  

Linux has many lessons for today's business world not least the ability to show that businesses can create radical innovation in a decentralised, modularised, virtual organisation. The growth of the modular company or networked company such as AT&T represents a fundamental shift in the way traditional value chains are constructed and indeed co-ordinated (Hamel 2000). As most of the Linux hackers were Linux customers the Linux project shows the increasingly important role customers are playing in product designing and manufacturing. This combined with Linux's great ability to communicate and gain vast amount of knowledge inevitably leds to the creation of a highly desirable and market-led product. The over-riding benefit of the open-source business model is that it will "facilitate more effective business process and development models that are faster, cheaper and drenched in share knowledge" (Lighthouse 99 Case Study). However the suitability of the open-source movement to industries other than software manufacturing is to be questioned, "Open source has limited applicability in markets other than software" (Lighthouse 99 Case Study). Companies such as AstraZenica, Ford and Vodafone would have immense problems using open-source as the degree of knowledge creation and sharing would be questionable due to the complexity of their industry. If these companies gave their new product developments free onto the Internet then competitors at better stages of the development process, or who have greater resources and capabilities may and will capitalise on this information. Open-source is ideally suited to the software industry as the relatively small cost of owing a computer and sharing knowledge makes market entry and product innovation highly practical.

Linux provides useful lessons for today's mangers as the benefits of pushing-down knowledge and allowing the continuing exploitation of ideas and creativity through constant experimentation and feedback. Companies such as 3M already try to encourage this by ensuring that their staff spend at least 15% of their time on 'unscheduled projects' (Nordström and Ridderstråle 2000). This must be facilitated as Linux has shown, through a community built upon open sharing and communicating new knowledge. The Linux project has also shown managers that the traditional motivational factors of money and target achievement are not always relevant to a productive and innovative work force. The Linux project with its community values of an open meritocracy, self-reputation, willingness to give and share are just as important as numerical benefits to promoting an innovative community of workers.

Linux provides managers with the new methodology of allowing in individuals to act with some degree of autonomy but with specific objectives in mind. The very open and decentralised system that helped create Linux has continued to highlight to managers that the old hierarchical and process-laden companies of the past are no longer applicable in today's radically changing software industry.

The story of Linux's creation to its final adoption by the major computer companies shows a fascinating story of how the software industry was radically challenged by an open source movement that went against many of the traditional concepts of the market-leading companies. The growth of the Internet and its continuing ability to connect people around the world at relatively small costs was instrumental in conveying the reach flows of knowledge that the Linux community created and thrived upon. This self-organising community evolved into a highly complex and adaptive ecology of hackers capable of high levels of incremental innovation whilst constantly up-dating the source code. This rapidly involving system created an operating code that became highly portable, robust, reliable, secure and functional, a system over and above the powers of Microsoft. The highly important use of modularisation and parallel development showed the software industry that this community of hackers was redefining the rules of the software industry. The decentralised and open system of Linux contrasted to the closed and hierarchical system of Microsoft was highlighted by the Cathedral and Bazaar. As the commercial viability of the Linux 'ecology' developed the commercial vendors provided a stronger customer focused platform for Linux and companies such as Red Hat soon attracted recognition and investment from the major software and hardware developers. The business world and indeed its managers have learnt many lessons from the rules  of the Linux community but their applicability to other industries especially manufacturing has to be evaluated according to the industry structure and suitability of open-source. Many traditional software companies such as IBM have adopted Linux and other open-source projects like Apache. The success of Linux will most likely depend upon the ability of vendors not to fork and the continued belief in the values of open-source Vs the traditional proprietary approach. One fact remains constant amongst the rapidly changing structure of the software industry; Linux has written a new chapter - will the industry ever be the same again?

The Linux Revolution: A Paradigm Shift in the Software Industry by Benjamin Wright
Journal of Hyper(+)drome.Manifestation, Issue 1 - September 2004 Collaborative Filtering
URI: http://journal.hyperdrome.net/issues/issue1/wright.html

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