Case #2 – IBM going ‘open’

By • on May 9, 2011

In my view, one of the most important questions in the space of open innovation is how closed companies can make the transition to being open. One of my favorite cases on this topic is Baldwin, O’Mahony, and Quinn’s IBM and Linux (HBS-Case 9-903-083). As the title suggests, this case describes events in 1998 leading up to a critical moment in IBM’s recent history – whether or not to participate in the development of the open source software (OSS) operating system Linux.

IBM nowadays probably being the largest commercial supporter of OSS and Linux, many of you will know the outcome of this decision. However, the case paints a rich and convincing picture that these developments could not have been foreseen at all in 1998. Rather, at that time, IBM is the first major player thinking about putting its weight behind Linux and, rightfully, IBM is very worried about the consequences this move might have for the company as well as for Linux and its community.

I think that the case is brilliantly suited to be used as a platform to highlight the consequences of a firm opening up, and the difficulties of making the transition to an open innovation model. Thus, while the authors suggest in their well-written teaching note (HBS-Case 5-906-016) that this case is suited to highlight differences in innovation management approaches or in the context of a course on organizational behavior, I personally think that a combination of these elements can also be very fruitful. Usually, I try to lead students toward understanding the workings of OSS and the motivations of contributors, and then scrutinize how these can be appropriately accounted for in an approach by IBM that will also help IBM to make money (i.e., what is the business model?). Finally, I encourage students to consider to what degree the specific context of IBM and OSS can be generalized toward open innovation in general. This angle is especially useful to discuss potential intra-organizational implications of the decision to open up, and potentially, to create a cliff-hanger for another session that focuses more specifically on one of these implications.

Because the case features extensive material on the technicalities of OSS, I have found it to work well with diverse audiences; nonetheless, if you do not expect to have a single student with a “techie” background in your course, this case might not be ideal for you. This is because in the numerous times I have taught the case, having at least a few students who have some understanding of OSS or have even been involved actively themselves has greatly facilitated class discussion thanks to their passionate and insightful contributions. Notably, the case works fine even if the majority if your audience has no technical background at all, especially if these students are skeptical about the value of being open. For example, some of the most interesting discussion I have witnessed have benefited from the presence of students of economics that could (initially) neither understand why people would develop OSS, nor why firms would want to plough resources into it! Importantly, if you teach this case to such an audience, make sure that you spend enough time in the beginning so that they truly understand the technicalities of OSS and the IT industry – the teaching note will again be very helpful for you in doing that. Finally, even if you would usually feel uncomfortable using a case with a strong IT focus, I would urge you not shy away from using this case. The case and the teaching note contain a lot of background information and additional reading material so that you will be ready to initiate and direct an exciting class discussion!


Carliss Y. Baldwin, Siobhan O’Mahony, James Quinn  “IBM and Linux (A),” Case 9-601-086, Harvard Business School Publishing, June 26, 2003., last accessed May 8, 2011.

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