Megatrend: Open-Source Economy

Intellectual property has been an essential asset of innovative businesses for centuries. Protecting new technologies, however, will soon become a largely obsolete strategy.

This is a part of our series about global megatrends. Please read the introductory post. On the 28th of February, 1890, the British Photographic News published an article on William Friese-Greene’s invention, the “kinetoscope”. Friese-Greene sent a copy of the article to the well-known inventor Thomas Alva Edison. He was hoping to join Edison’s team. Unfortunately, Edison did not think of sharing anything with William Friese-Greene. Quite the contrary was his intent. Edison gave the article describing Friese-Greene’s invention in detail to his employee, W. K. L. Dickson, who then improved on the original design. Soon, Edison patented everything around the motion picture idea and made an impressive amount of money from it. William Friese-Greene never saw a penny from his moving picture invention. Unfortunately, he didn’t keep his ideas secret until he could sell them at a profit. Hiding ideas from the rest of the world to maximize the inventor’s profit used to be a rule. This rule is about to change fundamentally.


Intellectual property, in short, “IP,” is an intangible asset that can be worth billions of dollars. Patents protect ideas, and the patent owner can sue any person or organization that uses the patented knowledge for commercial purposes. It is expensive and often practically impossible to determine if a new invention violates one of the more than six million patents worldwide. In addition, there is no global IP legislation. For instance, patenting a software algorithm in Germany is practically impossible, whereas such patents are popular in the United States. While it is a basically good idea to protect inventions, some so-called “patent trolls” abuse the patent principle to make billions of dollars by simply buying patents and subsequently suing alleged patent breaches to collect colossal compensation. This “patent trolling” is making innovation an incalculable risk. Patent trolls are especially active in software and general IT industries where patents apparently can cause more harm than good. Today’s ubiquitously connected worldwide Internet economy faces new challenges that further erode the traditional role of IP protection as a business model. The main culprits include the lax IP laws in other countries (e.g., in China), the “ideas-are-commodity” mentality of the Silicon Valley startup culture, and the easy access to new ideas not yet patented. In the age of 3D printers, ideas may increasingly become tangible products long before formal patents can protect them. Another issue stems from the security issues of “closed-source” products. For instance, it has become obvious that government spy agencies demand backdoor access to encryption devices. This creates a general security risk for all Internet users. The lack of transparency of closed-source communication solutions is propelling the open-source software movement, especially in the area of basic IT infrastructure like Internet routers and content servers. Despite surprising events like the discovery of the Heartbleed bugs in an open-source security protocol, the general sentiment is to prefer an open-source solution, demonstrated by the triumphant march of Linux as a standard operating system for Web-related solutions. The recent NSA scandal has increased the general awareness of the problems stemming from “closed-source” industrial solutions. Similar developments are also taking place in industries outside of information technology. In the pharmaceutical industry, “open-source drug discovery” initiatives like “Open Source Malaria” are rising. Various initiatives press ahead with the “open-source car” idea. Initiatives like the Open Source Hardware Association pursue the idea of generally available electronic product designs. Open-source airplanes also seem to be a logical development. Financial institutions see a growing demand for shared, open-source solutions. The arms industry is intensely interested in the benefits of open-source development. Such developments indicate a global sentiment against strict IP legislation. Even in the home country of patent lawsuits, the U.S.A., Microsoft promotes giving away primary research results and even openly supporting open-source movements, apparently following the logic: “If you can’t beat them, join them.” This trend is accelerating.


  • Innovative products and services will become more quickly available to everyone. Instead of closed expert communities, the broader public will increasingly be the first-level evaluator of innovations.
  • Innovation will continue to beat invention. The ubiquitous availability of open-source components will create a flood of engineering jobs, while jobs aimed at creating entirely new products and technologies, often based on extensive ground research, will be in a relative retreat.
  • The reuse of open-source components will increase. Any security or safety defects of components will likely have an industry-wide impact on many consumers worldwide. That will require a more safety- and security-conscious use of products, especially communication and transportation devices.
  • Knowledge of open-source hardware and software solutions and their frameworks, as well as the ability to build attractive products from them, will become a much sought-after personal skill.
  • Due to shared accountability, product liability will become exceedingly complex, and it will be hard to sue for personal damages caused by faulty open-source technologies successfully.
  • New products’ prices will fall shortly after their introduction, as the competition will quickly develop and sell similar products.
  • The benefits of an open-source economy will become so crucial that lobbying groups will ensure the weakening of IP protections in technology-driven industries.
  • The manufacturing industry in developed countries will once again become a central component of national economies.
  • Safety will become a huge issue, and standards will be costly to implement. Modern safety standards will embrace the open-source economy movement with comprehensive safety services, including safety design reviews, approval procedures, and consulting.
  • The pace of innovation will increase significantly. Implementing new ideas “here and now” will become a key market driver. Because of weak or even non-existent IP protection, vendors will quickly develop and sell new products before the competition can replicate them. Time to market will become one of the most important economic aspects.
  • The strategy of successful businesses will shift from technological innovation to implementation and execution.  While innovation will further outpace the invention, the execution will be by far the most critical business skill.
  • The entire world’s network and computer infrastructure will run on open source (sorry, Microsoft and Apple!)


The open-source economy is inevitable. Not only an obvious correlation but also a strong causality exists between weak IP and the products based on open technologies. Open-source ideas propel innovation, leading to more advanced, open-source technologies, weakening the IP, and leading to further open-source-based products. Businesses will profit from a huge database of free technologies available to all. Investors will focus on business models more than clever product ideas. That may reduce risks, but it will also diminish the chances of inventing game-changing products. The traditional “inventor” will go extinct. Continuous improvement will become a predominant business principle. Technological revolutions will rarely occur. Will we take notice? Probably not. Most of us will just enjoy the outcomes without understanding their background. Will our lives be better in the upcoming open-source economy? I hope the answer is yes. Most of us will live long enough to experience it, so we shall see.
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I am a project manager (Project Manager Professional, PMP), a Project Coach, a management consultant, and a book author. I have worked in the software industry since 1992 and as a manager consultant since 1998. Please visit my United Mentors home page for more details. Contact me on LinkedIn for direct feedback on my articles.

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