With the publication of his first book, Open Innovation, in 2003, Dr. Henry Chesbrough coined a new term and created a new paradigm for innovation that has been widely accepted and taught at business schools and management training centers around the world and implemented at leading corporations. Open innovation asserts that a company or organization should make greater use of external ideas in its business and allow its own ideas to go out beyond its own boundaries to others to use in their businesses. The concept weaves many disparate areas: R&D, corporate venturing, spinoffs, licensing and intellectual property, among others, into a single coherent framework. Dr. Chesbrough has since extended the open innovation concept to the broader issues of corporate business models and to the growing sector of the economy dominated by services.
Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation. Companies can commercialize internal ideas through channels outside of their current businesses in order to generate value for the organization: examples include spinoff/ startup companies and licensing agreements. In addition, ideas can also originate outside the firm’s own labs and be brought inside for commercialization.
Open Business Models enable an organization to be more effective in creating as well as capturing value. They help create value by inclusion of a variety of external concepts and by utilizing a firm’s key asset, resource or position not only in that organization’s own operations but also in other companies’ businesses. By addressing the firm as a whole and restructuring a company’s business model as an adaptive platform, Open Business Models expands upon the open innovation concept.
Open Services Innovation is an escape route from the commodity trap – the decreasing profitability of products as they become commoditized – and a solution for growth, giving firms a significant competitive advantage. But service businesses are not immune from stagnation – like commodity businesses, they too have to raise their game, but they do so in different ways, often by working effectively with products to create platforms.
Current Projects in Open Innovation
Theoretical foundation of Open Innovation: the concept of Open Innovation has been highly popular both in academia and industry after the decade of its first introduction. More importantly, its own definition has evolved as more research has been done. So the Garwood Center puts significant resources into further research in this area. These resources include post-doctoral students, PhD students, visiting scholars, a select number of MBA students, and occasionally undergraduate students. We also host an annual research conference and collaborate with ESADE in Barcelona to host an annual PhD course on open innovation.
Empirical evidence of Open Innovation adoption, and input on performances: With a collaboration with the Fraunhofer Society in Germany, Garwood conducts the periodical survey of open innovation adoption among large firms. Surveying large firms in both Europe and in the US with annual sales in excess of $250 million, this survey report presents many important facts that show to which extent and how large firms are now practicing open innovation. The survey will be repeated every couple of years, and is being extended to countries like Japan.
Applications of Open Innovation: We look at various applications of open innovation, which include crowdsourcing, crowdfunding, innovation ecosystems, public policies, NGOs, and so on.
Failure cases of Open Innovation: analyzing previous failure cases of open innovation informs great insights both to practitioners and academics. For example, we run a “business model clinic” session during the Berkeley Innovation Forum to understand and reflect the challenges and barriers of practicing open innovation and extract lessons to learn for future implementations from various industrial contexts and domains.
Boundary conditions for effective Open Innovation: In order to practice an effective and efficient open innovation, we look at feasible and realistic boundary conditions to implement open innovation. They include organizational structures, innovation processes, cultural change, top management commitments, business ecosystems, etc.
Open Innovation in various industrial contexts: We study how open innovation is practiced in numerous industries. Few examples are Automotive, Food/Sustainability, Pharmaceutical, Information Technologies, etc.