Open for business

Open source has found itself into business models and here are three stories:

1) As highlighted in this article, http://www.economist.com/business/displayStory.cfm?story_id=5624944 Wikipedia is an excellent example of open-source business models – the global encyclopedia with 120,000 articles is created and maintained by everybody. Just like with Linux, processes and content are being developed by everyone.
2) The other day, we had a candidate from Eastern Mich. Univ interview for an internship and her resume said “head of 500-member recreational activity” in the “extras” section. Obviously I was curious and she told me that it was an online gaming community called World of Warcraft (www.worldofwarcraft.com) and she spent working 8 hours/ day last summer monitoring members!
3) BPM: For the uninitiated, it’s Business Process Management. What it means is that entire functions of businesses (with underlying software code – aka .NET) will be available in a ready-to-use format - for e.g. sending a bill to a telecom customer. So say as a manager you wish to create a business process – all you need to do is pick and choose from the different functions and boom – your entire process with underlying software code is ready. More: http://www.bpmi.org/

Net-net: Viewing all three stories together – there are far reaching implications for global business. For one, it takes outsourcing to an extreme-level – not only will you instantly globalize your processes but you will also forgo control and development costs (e.g. companies using mapquest today). Advancing 5-10 years from now, your business partner/ employee/ consumer will be the girl who grew up monitoring web-communities like World of Warcraft and she will tend to work with an open-source/ unknown world. Finally, if processes (not only software) become “open” and available for anyone’s use (such as BPM modules for different functional areas) – imagine what will happen to speed, place, and functionality of product development.

Valuation: If you know Van Gogh, you know it all.

I recently had an aha-effect when I discovered that I can understand how to value businesses if I can understand the science behind valuing art. Throughout my time in Michigan, I tried to figure the logic behind valuing companies and didn’t because there’s none. Everyone in bschool tried to talk to me into numbers and I knew that that logic could be fudged. If you think about it – Van Gogh, Picasso, Paul Guaguin etc. are all ugly but they are original. When the market tried to put a value to it, they couldn’t because there was nothing they could compare it with. Similarly, if the market can bucket a business as say financial services/ BPO/ IT or whatever – they will compare and value it like other companies they know in that space – but if the business is original enough then the drama begins. And then finally and quite simply the secret behind valuation is this: the value of *anything* is what someone is willing pay for it.

Dubai Port Deal

Of course I can’t help but think the whole thing was a good definition of xenophobia – the ports are being outsourced anyways but British is ok, Dubai is not. You can listen to the old story here: http://www.npr.org/templates/story/story.php?storyId=5258547. But here’s the juicy part, 3 desis (COO, CFO, Sr VP) are part of the senior management team that made the deal happen: http://www.dpworld.com/members.asp?MCatID=3&PageID=10&SubPageID=4&PSID=1