August 3, 2007

"Open source business model" takes on a new meaning with the Open Business Foundation

Author: Tina Gasperson

The Open Business Foundation (OBF) operates on two premises: that the open source development community makes good business sense, and that small businesses can be more successful if they band together with each other to share resources of all kinds.

OBF's founder Robert Whetsel, the owner of Ravensong Consulting, says that OBF "was developed from the design philosophy and the principles of open source software communities. Furthermore, we promote true community empowerment in that we require members to share resources, experiences, and business processes. Therefore we can pursue joint opportunities with trusted and proven members to create a thriving, open business community."

Whetsel came from an entrepreneurial family, and grew up surrounded by small business owners. After a tour of duty in the military, his first goal was to open his own business. He started with a Sonic restaurant franchise, but ended up working so many hours that his "quality of life was zero. That's not what I signed up to do."

Whetsel started thinking about other ways to earn a living. "I was a geeky kid; had my first computer built when I was 14. I was one of those guys. People were always asking me for help, and I realized that I could get paid for that. So I started an IT firm." He says running a business solo was a completely different experience for him. "You're by yourself. You gotta understand marketing, bookkeeping, and tax regulations. That's a tall order."

Smart enough to realize his strength was in IT consulting and not administration, Whetsel envisioned a business collective modeled after a traditional open source development community; one where there were no secrets; where everyone shared their techniques for creating a successful business with each other, and they worked together in a synergy that would allow their very small businesses to band together and compete with much larger and more diverse companies.

"I found other entrepreneurs and other companies who had certain things they were really good at, and we complement each other. That was the epiphany. I started playing around with different sales and partnering models, and came up with the basic framework for the OBF."

Whetsel says OBF is a kind of virtual business incubator through which member companies can give and receive mentorship and consultation, as well as share labor or just network for new business. "If I'm working with a client and they have a need that I can't supply, there may be someone in the foundation who has that skill set," he says. "Then I can do a formal introduction by bringing that company into a business meeting with the client, setting up a very warm contact. Now I've created a bridge between my client and the company. The company that receives the new business is going to pay me a referral fee." If his client isn't comfortable taking on a new vendor, Whetsel says the OBF provides for labor sharing. "We use them as a subcontractor."

But OBF goes beyond old-fashioned business networking, Whetsel says, which stop at sending out leads and referrals. "I mentor new businesses all the time," he says. "And sometimes, I'm the mentee." OBF has a peer review process that no simple networking get-together provides, he says. "If I go to work on a project for a member company, and I totally drive the project sideways and make everyone look bad, that gets told to the whole group. That makes me strive to do the best that I can do. We know we're going to be evaluated." Whetsel says because of this feature, the foundation tends to attract members with "a higher sense of responsibility" than in groups without a peer review process.

One of the most interesting features of the OBF is business process sharing, in which companies help their competitors with basic commodity processes. "For example," Whetsel says, "recently I worked with another company that helped me set a price point for my product, because I can build the application, but I didn't know what to charge for it." The other company walked Whetsel through the steps it took to decide on the best price for its product. "By the end of the meeting, I was able to determine what would be a fair price, following the process the other company used."

Whetsel says member companies also share source code from custom applications with each other, "so we can make our applications work together. From a proprietary standpoint, most people would look at that and get scared, but most of us are open source guys anyway."

OBF members don't work from a set fee structure; instead they work out their own deals on the fly. "It's a negotiation between individual companies," Whetsel says. "At Ravensong, we worked out all the practical stuff beforehand, so if I go in to bid a project, I know what I'm going to get out of it. Sometimes I'm not getting a whole lot, but the client is getting the best service they could ever get, and that's more important -- to provide a service to the client that makes them want to come back to you."

OBF has had to remove several companies from its fellowship when those businesses didn't want to play by the rules. "We have kicked out seven companies that were not good at sharing," Whetsel says. "We had a company that was trying to take clients away from the other members. They were going to clients and saying they could do it better. You try to weed those folks out in the beginning, but sometimes you can't." OBF recently changed the process for membership in order to eliminate some of those kinds of problems. "We're being exclusive now. The first process is to be invited by a member in good standing. We review the application and the board of directors meets. Normally, if you've been invited you get approved for a probationary period to show that you're willing to give back, give referrals. It's very easy to sit there and wait for people to give you a project. So if the company shows they're a good community member, then they can pay the fee and join."

Whetsel says the 26 members companies are mostly involved in IT, so "there's not a technology that we do not have access to." He says the group will also be expanding to admit businesses specializing in other industries. In five years, Whetsel hopes OBF will be known as a "clearing house for partner programs. This is better than any partner program. I am able to sell any product or service that any member might have. That's pretty phenomenal. We already have three companies that have worked together on quite a few projects. We really are an open source business community -- not open as in technology, but the business itself is open source. We have transparent practices and sharing of resources like you normally don't do with other companies. We're open-sourcing business."


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