Here is an excerpt from an interview of Tim O’Reilly for the McKinsey Quarterly during which the tech entrepreneur, author, and investor looks at how open data is becoming a critical tool for business and government, as well as what needs to be done for it to be more effective. To read the complete article, check out others, learn more about McKinsey & Company, and register for email alerts, please click here.

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The value of openness

We’re increasingly living in a world of black boxes. We don’t understand the way things work. And open-source software, open data are critical tools. We see this in the field of computer security. People say, “Well, we have to keep this secret.” Well, it turns out that the strongest security protocols are those that are secure even when people know how they work.

Secrecy is actually, it turns out, a fairly weak way of being secure. And I think in a similar way, we have to understand who owns the rules, how are they driven, how are they guiding our behavior. And there may be cases where you say, “Well, actually it’s a reasonable trade-off to have some degree of secrecy.”

We have this with trade secrets all the time in the commercial world. But there are other areas where we should say, “No, we really need to know how this works.”

A platform for innovation

It seems to me that almost every great advance is a platform advance. When we have common standards, so much more happens.

And you think about the standardization of railroad gauges, the standardization of communications, protocols. Think about the standardization of roads, how fundamental those are to our society. And that’s actually kind of a bridge for my work on open government, because I’ve been thinking a lot about the notion of government as a platform.

So much thinking in government is around, “Well, we’re going to build a program to solve this particular problem.” But the most successful government programs to me seem to be platform kinds of programs. And I’m not talking about, “Oh, well, the government funded the Internet originally.”

I’m talking about things like GPS. The fact is that this is a military program that, through a crucial policy decision, was opened up for civilian use. If this was still just for fighter pilots, we wouldn’t have that Google self-driving car. We wouldn’t have maps on our smartphones. And that’s why I think this idea of a platform and the idea of a market go hand in hand so well. Because when you build a really powerful, effective platform, you do enable a market.

Defining open data

We should define a little bit what we mean by “open,” because there’s open as in it’s open source. Anybody can take it and reuse it in whatever way they want. And I’m not sure that’s always necessary. There’s a pragmatic open and there’s an ideological open. And the pragmatic open is that it’s available. It’s available in a timely way, in a nonpreferential way, so that some people don’t get better access than others.

And if you look at so many of our apps now on the web, because they are ad-supported and free, we get a lot of the benefits of open. When the cost is low enough, it does in fact create many of the same conditions as a commons. That being said, that requires great restraint, as I said earlier, on the part of companies, because it becomes easy for them to say, “Well, actually we just need to take a little bit more of the value for ourselves. And oh, we just need a bit more of that.” And before long, it really isn’t open at all.

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To read the complete article, please click here.

Tim O’Reilly is the founder and CEO of O’Reilly Media. This is an edited transcript of his remarks.