Importance of Aligning Your Corporate Strategy to Your Business Strategy.
I'd like to expand on Glyn Moody's comparative analysis of Google and Microsoft open-source projects. While I do believe it's relevant to analyze how Google and Microsoft compete against each other and to contrast the merits of open versus closed software strategy, I see one fundamental difference when in comparing these two organizations. As I'll try to elaborate, I don't believe Google and Microsoft are competing in the free open-source software (FOSS) arena with the same objective. FOSS is in Google's DNA. Google's FOSS strategy is a means of rallying a community of the best programmers, accelerate innovation, and tear down walled gardens to redefine software in the context of the new Internet. Microsoft's FOSS activities are part of a classical defensive and tactical strategy to protect its eroding corporate strategy (software industry). As I draw a distinction between corporate versus business strategy, you'll understand were I am heading.
These two technology giants remind me of the historical relationship telecom service providers (a/k/a carriers) have had with their network infrastructure suppliers (tech manufacturers). One is a supplier and the other is a service provider. As long as I can remember, carriers have wanted to dictate innovation and demand source code from their vendors, but they want nothing to do with manufacturing. When I think of Microsoft, I think of a software publisher (producer) and Google as a value added service provider.
Throughout 2007, I highlighted the momentum behind open innovation. Moreover, the extent to which free open-source software (FOSS) is being used in giant Internet brands like Google.
If you have any doubt about the momentum behind free open-source software (FOSS) and the pressure facing the software licensing business model, I would encourage you to read Glyn Moody's post in Redmondmag.com. Google is quietly assembling an army of the brightest FOSS innovators and coders to work on open-source projects. As Glyn points out, Microsoft has spent years getting a handle around the implications of Linux to Windows. Not a lot else. However, Google's FOSS projects include GNU/Linux, Apache, Android, Google Gears, and events like Summer of Code to identify the best talent. Clearly, Google understands that FOSS initiatives have to start with identifying and rallying programmers all over the world. You cannot just announce that you're going to change your business strategy from a licensed model to an open model. You have to begin coalescing a community of programmers and other contributors behind your open-source initiative.
Google's business strategy to embrace open-source enables it to achieve a competitive advantage that is aligned with its corporate strategy. What's the difference between a corporate strategy and business strategy? Corporate strategy reflects various investment criterion and market opportunities that ultimately rationalize why you have chosen what industry to compete in. Deciding to enter the tech or software industry does not determine your business model. Fundamentally, you have to decide if you're going to be a producer or a service based organization. A business strategy, by contrast, reflects those decisions you make in determining how to compete and capture a differentiating source of competitive advantage.
Google's business and corporate strategy are aligned. Unfortunately, Microsoft's internal conflict stems from a misalignment of its corporate and business strategy. Microsoft is still clinging to its original software publishing industry (selling software licenses). Google does not have to struggle with the decision. That decision was made on day one when the company was formed. However, Microsoft continues to struggle with this decision.
I agree with Google's CEO Eric Schmidt. In my opinion, Google's FOSS strategy is far more strategic than going after Windows productivity applications and market (Office, etc.). Google's open-source projects and strategy is to accelerate innovation and strengthen brand loyalty through transformational changes. Bringing more transparency to software in the context of the new Internet (Web 2.0 and SaaS) and every computing devices we use will create value. If you're currently a software company and thinking about joining the open-source movement, just remember that the FOSS movement has more to do with adoption of a new corporate strategy and business model than just making your source code available.