Center for Open Innovation


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Open Innovation in the News



Chesbrough in BusinessWeek: Behind the Hollywood Strike Talks

Center for Open Innovation Executive Director Henry Chesbrough wrote a November 1 BusinessWeek article titled "Behind the Hollywood Strike Talks," about new opportunities for the Internet and digital media as a result of the changing landscapes of the movie business. Click for full text.

Chesbrough in BusinessWeek: Microsoft Should Welcome Piracy in India and China

Center for Open Innovation Executive Director Henry Chesbrough wrote a July 25 BusinessWeek article titled "Microsoft Should Welcome Piracy in India and China," about the Microsoft’s challenges in building market share in Asia.   Click for full text.

Chesbrough in The Economist, October 11
Henry Chesbrough was featured in article titled "The love-in," regarding speeding up innovation efforts through the web. Click for full text

Chesbrough in the Wall Street Journal: Why Bad Things Happen To Good Technology

Center for Open Innovation Executive Director Henry Chesbrough wrote the Business Insight article in the April 28, 2007 Wall Street Journal.  Chesbrough: “Put simply, bad things can happen to good technology. And much of what can happen is due to the business model the company uses to commercialize the technology. This is the next wave in innovation: to innovate the business model that commercializes promising new ideas and technologies.”

For full article  (in MIT Sloan Management Review)


COI Sponsors Innovation Services Conference

The Institute of Management, Organization and Innovation and its Center for Open Innovation and the Finnish Funding Agency for Technology and Innovation (Tekes) invited academics and business leaders for a service innovation conference on April 27-29, 2007 at the Haas School of Business at UC-Berkeley.

Services are today responsible for the main part of employment in the Western countries, yet academia has not yet developed a robust research agenda for understanding innovation in services.  The sponsors’ goals of advancing the knowledge of innovation and management in services were served through the conference, titled Innovation in Services: Challenges and Opportunities for Economies, Industries and Firms.

The conference examined service innovation at the Economy level, including innovative service concepts and associated skills and competencies for firms in a service economy; at the Industry level, including business models in services industries, and the ways in which they are similar to or different from those of product industries; and the Firm level, including service innovation processes in service firms, and the organizational structures, management and leadership methods of service firms.

Chesbrough writes in Forbes about the
Productivity Crisis in R&D

"Productivity in R&D is in crisis, in part due to the rising cost of technology development in many industries" writes Center for Open Innovation Executive Director Henry Chesbrough in Forbes magazine. Open business models, the subject of Chesbrough's new book (see below for details), offer solutions to the challenge of rising development costs and shorter product life cycles.

Full Article from Forbes


New Chesbrough Book Shows Companies How to Foster Innovation

In a new book that already has drawn glowing reviews, Haas School Adjunct Professor Henry Chesbrough calls on companies to break down their walls to foster innovation. Although just released in December, Open Business Models: How to Thrive in the New Innovation Landscape, already has received a Wall Street Journal review calling the book, "one that B-school students and lay readers alike will enjoy." BusinessWeek also included it on its list of the 10 best innovation and design books of 2006. In Open Business Models, Chesbrough argues for companies to look outside their boundaries for the best ideas and to capitalize on their own unused ideas through licenses and sales to other firms, even competitors. This new open approach requires new performance metrics, new processes, and changing long-held views about innovation and intellectual property, he says. Such change is essential in today's world of rising technology development costs, shorter product life cycles, and widely distributed knowledge, argues Chesbrough, executive director of the Center for Open Innovation. The center is part of the Institute for Management, Innovation, and Organization. Chesbrough illustrates how an open business model works with detailed case studies of companies such as Proctor & Gamble, IBM, and Qualcomm. Chesbrough, who received his Ph.D. from Haas in 1997, also offers a framework of six business model types -- with examples such as Wal-Mart, Dell, and Apple -- and a diagnostic test to enable managers to open up their own companies. Open Business Models is published by Harvard Business School Press. It builds upon Chesbrough's earlier book, Open Innovation: The New Imperative for Creating and Profiting from Technology, which was published in 2003 by Harvard Business School Press.

BusinessWeek names Open Business Models
one of Best Innovation and Design Books of 2006<

"As we browsed the 2006 aisle looking for books to include in our best-of list, we left some of the more predictable titles on the shelf -- books like The World Is Flat and The Long Tail, which have already become cliches. Instead, our team -- Jessie Scanlon, Helen Walters, Reena Jana, Jessi Hempel, Aili McConnon, and I -- chose what we see as the most significant books to hit the stores this year, the books that will continue to shape our thinking into '07.

Innovation may be the new black as chief executives everywhere get their PR writers to script them speeches that embrace it. But beyond the blah-blah, building effective innovation procedures and processes remains the single most important challenge for top managers. Five books provide serious, insightful advice: Payback by James Andrew and Harold Sirkin, Juicing the Orange by Pat Fallon and Fred Senn, Mavericks at Work by William Taylor and Polly LaBarre, Zag by Marty Neumeier, and Open Business Models: How to Thrive in the New Innovation Landscape by Berkeley professor Henry Chesbrough."<

Full Article from Business Week Online


Book Review of Open Business Models
in the Wall Street Journal

"Mr. Chesbrough's book is one that B-school students and lay readers alike will enjoy: His writing style is entirely user-friendly. Like a popular lecturer, he begins each chapter telling you what he is going to say, then he says it. If you overslept and missed a class, never fear. Mr. Chesbrough pauses at the start of each chapter to summarize what he taught in the one that preceded it. So refreshed, the reader is prepared to be taken in hand to the next interesting and provocative lesson."

Full Review from the Wall Street Journal


Headlines – Recent Coverage in the National Media

Henry Chesbrough, executive director of the Center for Open Innovation, was quoted or mentioned in recent national publications:

The Economist, October 11, 2007
Article titled: "A dark art no more," about the transformation of innovation from an art to a science. For full article.

CIO Magazine, September 11, 2007
Article titled "Open Your Doors to Innovation", about whether or not R&D is a core competency that companies have to own. For full article.

PDMA Visions Magazine, June 2007 issue
Henry Chesbough was interviewed about Open Innovation and Open Business Models. For full article.

Market Wire, April 26, 2007
Article titled "Vinod Khosla, Legendary Venture Capitalist, and Dr. Henry Chesbrough, Open Innovation Expert, Keynote 2007 Venture Forum," on the country's largest showcase of early stage innovation at the annual Venture Forum.  For full article.

Consultant News, April 18, 2007
Article titled "PRTM Management Consultants form academic affiliation with Henry Chesbrough”. For full article.

BusinessWeek, April 10, 2007
Article titled "How to Live Up to Innovation," about innovation success and failure. For full article.

Financial Times, March 12, 2007
Article titled “Intellectual property rules block search for new idea,” regarding his book, Open Business Models. For full article.

Wall Street Journal, March 3, 2007
Article titled "The Path to Growth," about his article, "Why Companies Should Have Open Business Models."

Insurance Networking News, February 1, 2007
Article titled, "Special Report: What Other Industries Can Teach Carriers," regarding innovative approaches to business problems. For full article.

Forbes, January 26, 2007
Chesbrough wrote an article titled "Productivity Crisis in R&D," in which he offers ideas on combating the growing costs of technology development. For full article.

Globe and Mail, January 24, 2007
Article titled "Veni, vidi, wiki," regarding mass collaboration. For full article.

USA Today, December 27, 2006
Article titled "Mass collaboration could change way companies operate." For full article.

Wall Street Journal, December 21, 2006
Review titled "Ideas for the Taking."

BusinessWeek Online, December 6, 2006
Article titled "Best Innovation and Design Books for 2006." For full article.

BusinessWeek Online, December 4, 2006
Article titled "Thriving in the New Innovation Landscape." For full article.

The Australian News, October 31, 2006
Article titled "Record for research as competition hots up." For full article.

Sunday Times, London, September 17, 2006
Article titled "Small business: Boost profits by teeing up licensing deal." For full article.

SDA Asia Magazine, September 11, 2006
Article titled "Securing Your IP in a Global Product Development World." For full article.

AMR Research, September 7, 2006
Article titled "How To Secure IP in a Global Product Development World." For full article. (requires login).

CNW Telbec, Canada, August 30, 2006
Article titled "InnoCentive Appoints New Advisory Board Members; Thought Leaders to Assist Open Innovation Company's Growth Strategy" after Chesbrough was appointed to the company's new advisory board. For full article.

Forbes, July 6, 2006
Article titled "Kraft’s Innovation Challenge." For full article.

Marketplace, May 23, 2006
Report titled "Chasing innovation." For full report.

BusinessWeek, April 24, 2006
Article titled “The World's Most Innovative Companies,” regarding the escalating phenomenon of open innovation and the open-source movement. For full article.

New York Times, April 18, 2006
Article titled “Academia Dissects the Service Sector, but Is It a Science?” For full article (requires registration).

Boston Herald, April 4, 2006
Article titled "Takeover Leaves Future of Bell Labs Uncertain." For full article.

Science Business, March 2, 2006
Article titled “'Proudly Found Elsewhere': the move to distributed R&D.” For full article.

New Yorker, April 11, 2005
The Financial Page, Article titled “All Together Now”


Awards & Recognition



Chesbrough Receives IBM Services Science, Management and Engineering Faculty Award

Rhonda Righter and Hank Chesbrough at the extreme right, Jean Paul Jacob and Jim Spohrer at the extreme left

United Services; the two Berkeley recipients of IBM Faculty Awards in SSME for the current year (Rhonda Righter and Hank Chesbrough at the extreme right) join hand with the 2 IBM SSME Campus Missionaries, Jean Paul Jacob (extreme left of picture) and Jim Spohrer.


IBM and UC Berkeley Launch SSME

From the IBM Research SSME pages:

Services Science, Management and Engineering (SSME) is a new academic discipline and research area aimed at studying, improving and teaching services innovation. It is the application and integration of scientific, management and engineering disciplines to tasks that one organization beneficially performs for and with another (that is, “services”).

The goal of the SSME discipline is to make productivity, quality, sustainability, learning rates and innovation rates more predictable across the service sector, especially in complex organization to organization services including business to business, nation to nation, government to population, and so on.

Chesbrough has been a driving force behind service science in the business community, with publications related to it in the Financial Times and in Harvard Business Review, as one of the breakthrough ideas of 2005. Chesbrough also offered the first explicited named service science course at Berkeley last fall (with Bob Glushko of Berkeley), and is working on a major paper on this topic (with Jim Spohrer of IBM Research).

[Back to Awards]

Chesbrough's Open Innovation Wins Book and Article Awards

Henry Chesbrough

strategy+business magazine named Open Innovation: The New Imperative for Creating and Profiting from Technology, by the Haas School's Henry Chesbrough, among the best business books and the top book on innovation of 2003.

Chesbrough, Ph.D. 97, who returned to Haas in 2003 as visiting assistant professor and executive director of the Center for Technology Strategy and Management, wrote the book based on his experiences working in the tech industry for nearly a decade. While working at Plus Development Corp., a subsidiary of data storage systems manufacturer Quantum Corp., he came to realize that these corporations were too insular in their research focus, while their businesses only used concepts conceived in-house.

strategy+business editor Randall Rothenberg explained the key concepts of the book in an NPR Morning Edition interview on December 30: "...Companies can no longer keep their own innovations secret unto themselves; ... the key to success is creating, in effect, an open platform around your innovations so your customers, your employees and even your competitors can build upon it, because only by that building will you create an ongoing, evolving community of users, doers and creators." strategy+business is published by Booz Allen Hamilton.

Chesbrough was also honored by the European Association for Creativity and Innovation (EACI) for his book Open Innovation: The New Imperative for Creating and Profiting from Technology.

Chesbrough’s book, published by Harvard Business School Press in 2003, was chosen by EACI as the “Best Book on Innovation.” The EACI promotes the fields of creativity and innovation in Europe and bestows its book awards at a bi-annual international conference, held this year in Lodz, Poland, on September 4-7.

Open Innovation was published in 2003 by Harvard Business School Press. Excerpts of the book were published in the Harvard Business Review, the MIT Sloan Management Review, the California Management Review, and CalBusiness. The book also led to Chesbrough's being named one of the top 50 innovators of 2003 by Scientific American.

[Back to Awards]

Chesbrough’s Article Noted at MIT Sloan Management Review

For the second consecutive year, MIT Sloan Management Review and PricewaterhouseCoopers joined together to honor the SMR articles that have contributed most significantly to the enhancement and advancement of management practice. Choosing from among the articles published in 2003, an independent panel of judges concluded that three contributions most completely met the standard for the award: To illuminate the interplay between the best in current management theory and practice in ways most useful to senior managers. In particular, the judges felt that each of the winners represents "fascinating work" in areas absolutely crucial for today's companies and managers — innovation and leadership — developed in ways forwardthinking yet pragmatic, solutions-oriented yet copiously supported and illustrated with high-quality research and thoughtfully constructed frameworks.

"The Era of Open Innovation"
Henry W. Chesbrough

Internal R&D is no longer the strategic asset it once was. One need only contrast the success of Cisco Systems, which acquires most of the technology it needs from the outside, with the struggles of Lucent Technologies, which inherited most of AT&T's Bell Laboratories and continues to seek fundamental discoveries internally. The author calls the traditional approach closed innovation; its watchword is self-reliance — if you want to do something right, you've got to do it yourself. He heralds in its stead a new model of open innovation in which the boundary between a firm and its surrounding environment is permeable enough to enable ideas to move easily between the two. In a landscape of abundant knowledge with a short shelf-life, open innovation offers newer, better ways to create value. "The author has carefully researched and documented a practice that is likely to become a major source of competitive strength for many companies," concluded one judge. "The work is highly original and thoughtfully constructed." Henry W. Chesbrough is an assistant professor at Harvard Business School in Boston.

This article appeared in the issue of MIT Sloan Management Review. (Reprint)

[Back to Awards]

Scientific American names Henry Chesbrough among 2003’s 50 innovators

Henry Chesbrough, a visiting assistant professor at the Haas School of Business, who also serves as executive director of the Institute’s Center for Open Innovation, and David Culler, UC Berkeley professor of computer science in the College of Engineering and former director of the Intel Research Berkeley laboratory, are included in the top 50 innovators of 2003 chosen by Scientific American and profiled in the December 2003 issue.

The magazine’s December issue contains its second annual salute to the Scientific American 50 — individuals, teams and organizations whose accomplishments in research, business or policymaking during the past year demonstrated outstanding technological leadership.

Henry Chesbrough

Henry Chesbrough, visiting assistant professor
at the Haas School of Business.

Chesbrough, while working for disk-drive maker Quantum in the 1980s, the magazine says, "began to wonder why large corporations such as IBM and AT&T couldn't seem to reap the market benefits of the advanced technology they created."

A senior product marketing executive for almost a decade for Plus Development Corp., a subsidiary of data storage systems manufacturer Quantum Corp., Chesbrough concluded that these corporations were too insular in their research focus, while their businesses only used concepts conceived in-house.

The magazine notes that in his book, Open Innovation: The New Imperative for Creating and Profiting from Technology, (Harvard Business School Press, 2003), Chesbrough proposed a new model of industrial research and development to eliminate the traditional boundaries between businesses, universities, start-ups and sources of innovation.

Chesbrough earned his Ph.D. from the Haas School in 1997.

[Back to Awards]

Other Awards for Henry Chesbrough

Appointed Visiting International Fellow by the Australian Industry Group, November, 2004

Received Dell, Inc. Gift for the study of innovation in standards-based industries, June, 2004

Received IBM Faculty Grant Award for the study of Innovation in Services, May, 2004

Received Alfred P. Sloan Foundation Grant Award of $150,000 for the Study of Globalization of R&D in the Semiconductor Industry (with David Teece and David Mowery), April, 2004

Received NEDO/METI scholarship for research on spin-offs, March, 2003; renewed June, 2004

Appointed Sasakawa Foundation Research Fellow, Haas School of Business, January, 2002

Appointed Class of 1961 Fellow, Harvard Business School, 1999. Awarded Robert Noyce Memorial Fellowship in Industrial Competitiveness from the Intel Foundation, 1995-1997.

Awarded Outstanding Graduate Student Instructor at UC-Berkeley, May, 1996.

Awarded Olin Foundation Fellowship in Law and Economics, Spring 1995.

Received Distinction on Field Examination in Business and Public Policy, June 1994.

Links and Information

Open Innovation General Reference

Open Innovation Bibliographies

Open Innovation Conferences

Open Innovation Articles

Services Science Reference

Services Science Articles


Open Innovation General Reference

http://www.openinnovation.net/

http://www.quickmba.com/entre/open-innovation/


Open Innovation Bibliographies

http://www.openinnovation.net/Research/Bibliography.html

http://www.openinnovation.net/Book/NewParadigm/
Chapters/References.html

http://www.openinnovation.net/Conference/AOM2004/References.html


Open Innovation Conferences

Academy of Management 2006: PDW on Bringing External Innovation Inside,
Sunday, August 13, 2006, 9:30 a.m. (Submission # 10355).

Academy of Management 2005: All-Academy Symposium
Open Innovation: Empirical Research on Locating and Incorporating External Innovations,
August 9, 2005, 2:30 p.m. (Session #1064).

DRUID Summer Conference 2005: debate over Open Innovation, June 2005.

Academy of Management 2004: PDW held August 7, 2004 on Managing Open Innovation.


Open Innovation Articles

Submissions from:

Frank T. Rothaermel
Sloan Industry Studies Fellow& Associate Professor of Strategy
College of Management, Georgia Institute of Technology
[http://mgt.gatech.edu/rothaermel]

"The 2004 SMJ piece shows how small biotech firms orchestrate a system of open innovation through reaching upstream in alliances with universities, and downstream through alliances with pharmas. 

The 2006 SMJ piece hightlights the importance of simultanouesly pursuing the same (R&D) activity in-house and through outsourcing, an issue highlighted in your 2003 book. 

The 2007 Org Sci piece tries to get at the different antecedents to innovation at the individual, firm, and network (open) level). 

If you are interested in other work of mine, most papers are available at http://mgt.gatech.edu/directory/rothaermel/publications.html"

SMJ_2004.pdf

SMJ_2006.pdf

OrgSci_2007.pdf

 

Services Science Reference

Berkeley Services Science, Management, and Engineering Program
http://ssme.berkeley.edu

Berkeley Services Science, Management, and Engineering Course
http://www.sims.berkeley.edu/programs/courses/290-ssme

Berkeley-CITRIS SSME Initiative
http://www.citris-uc.org/research/foci/three

IBM Research SSME Site
http://www.research.ibm.com/ssme


Services Science Articles

Services Science: An ACM Special Issue

Business Week

Infoworld

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Book Review of Open Business Models in the Wall Street Journal

Ideas for the Taking
By LAWRENCE J. SISKIND
December 21, 2006

When Francisco D'Anconia in "Atlas Shrugged" decided that enough was enough, he engineered the destruction of his mining empire. In a marvel of synchronization, every mine, dock and ship was blown up at the very moment that the government was voting to nationalize his business. If Bill Gates decided to emulate Ayn Rand's hero, he would face a tougher challenge. If he blew up every plant, warehouse and office building of the world's greatest software company, Microsoft would then be…the world's greatest software company.

The difference is that D'Anconia Copper was based on tangible property, while Microsoft is based on intangible intellectual property (IP). Destroy every single Windows CD in inventory and Microsoft would remain the only company that could legally make and market new ones.

Henry Chesbrough, the director of the Center for Open Innovation at the University of California, Berkeley, is not the first academic to grasp the superior economic value of intellectual over tangible property in today's economy. But he may be the one who has thought most deeply about its consequences for business.

In "Open Business Models," Mr. Chesbrough has developed a useful dichotomy of old innovation and new. Traditional enterprises, he notes, innovated and commercialized internally. A company's research-and-development department worked on inventions that, if promising, were manufactured and marketed by the company itself. Operating with the "not invented here" syndrome, companies avoided innovations developed by outsiders. With the "not sold here" syndrome, companies kept bottled up inside those ideas that they developed but couldn't use. This led to enormous waste. Mr. Chesbrough notes that Procter & Gamble surveyed its IP and found that only 10% of its patents were in use; the other 90% had no value to the company. In the pharmaceutical industry, researchers, over a 30-year career span, might never see a project ship to market.

Mr. Chesbrough's ideal businesses resist the "not invented here" and "not sold here" syndromes in favor of "open innovation." They search outside their companies for the best ideas, soliciting input from other companies (including competitors) as well as from customers, suppliers and vendors. They take their unused IP and put it on the market, through sales and licenses. (Today, Qualcomm, with a work force of 8,000, generates revenue of $4.9 billion, an amazing $612,000 per employee, mainly through its technology licenses.) Sometimes companies even give it away, if it will promote their other products. (IBM, for example, recently donated 500 software patents to the open-source community, to encourage the use of the Linux operating system.) These forward-looking companies use "innovation intermediaries"—such as InnoCentive, Big Ideas Group and Ocean Tomo—to find IP, originating with others, that is worth acquiring and to market their own.

Some of these ideas appeared in Mr. Chesbrough's "Open Innovation" (2003). In "Open Business Models," he has gone further and explored how companies can transform themselves in order to take advantage of these trends. The heart of the book is a kind of taxonomy of business types—six business models that manage innovation with steadily greater acumen and efficiency. Imagine the famous portraits of the human evolution sequence (from monkey to Neanderthal to Cro-Magnon to Modern Man) and you'll catch his drift.

Type 1 companies, the most primitive, sell the same commodities as others in their industry, and they compete on the basis of price and availability. Unequipped (or not inclined) to develop or acquire innovative intellectual property, they are swept into extinction as improvements come into their field. Type 2 companies can differentiate their products from their competitors', but innovation is ad hoc and their strategies are more reactive than planned.

And so on up the evolutionary ladder. In Type 3, innovation is planned rather than random. In Type 4, companies have evolved to open themselves up to external technologies, selectively incorporating such ideas into their internal operations. Type 5 companies, more advanced still, integrate suppliers and customers into their creative process. They study their supply chains all the way back to basic raw materials, seeking technological opportunities to lower costs. They study their customers, searching for unmet needs.

What a piece of work is a Type 6 business model! How noble in its ability to innovate even its own business model through the use of spin-offs and joint ventures. New ideas move freely in and out of its infinite faculties. Mr. Chesbrough cites Dell as one such paragon of businesses. It works closely with suppliers, such as Intel, to test the next generation of chips. It works with its customers to create and install customized products, sometimes ensuring that each employee at the customer level receives a new PC every three years loaded with tailor-made software.

This six-step evolutionary construct is useful, as are the many case studies sprinkled throughout the book. But the work also has its shortcomings. Although Mr. Chesbrough refers broadly to "intellectual property," he nearly always means patents—an important IP element, but only one element. Microsoft's market power (and the reason it has been investigated for antitrust violations here and in the European Union) rests on its copyrights. Coca-Cola leads the soft-drink industry because of its storied formula, perhaps the most closely guarded trade secret in history. Don't try to sell "open innovation" to Coke! And celebrities have been marketing their unused IP for years, in the form of trademark licenses. Paris Hilton didn't need Henry Chesbrough to teach her the value of licensing her brand to outsiders.

Still, Mr. Chesbrough's book is one that B-school students and lay readers alike will enjoy: His writing style is entirely user-friendly. Like a popular lecturer, he begins each chapter telling you what he is going to say, then he says it. If you overslept and missed a class, never fear. Mr. Chesbrough pauses at the start of each chapter to summarize what he taught in the one that preceded it. So refreshed, the reader is prepared to be taken in hand to the next interesting and provocative lesson. Mr. Siskind, a partner with Harvey, Siskind LLP in San Francisco, specializes in intellectual property law.


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