Henry Chesbrough
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.
