When should a company relinquish control of hard-won proprietary technology in hopes of gaining a strategic advantage via an open source software model?

In a global case study published in the April 2008 edition of Harvard Business Review, coauthors Scott Wilson, senior manager, Deloitte Research, and Ajit Kambil, global director, Deloitte Research, address this tough and very real question.

The article describes a fictional company called KMS Corporation that introduces “Amp Up,” an electronic music game that couples a guitarlike piece of hardware with a software system that turns amateur flailing into rockin’ licks. The game allows users on different continents to jam together using only a computer, an “Amp Up ax” hardware device, and an Internet connection. After four successful years in the market, competition begins to creep into the equation in the form of open-source offerings that give users the power to program their own sounds and musical offerings. The question for KMS leadership is whether to embrace the open model and allow competitors and users to access and add to their proprietary codes, or try to fight this trend toward open models and protect their intellectual property through potentially extensive and expensive lawsuits. 

A diverse list of business leaders and thinkers contribute commentary to this fictional case. Collectively, their insights consider everything from potential liability risks to more strategic issues once intellectual property is no longer protected internally.

Read the full article.