Center for Open Innovation


Key Research Topic: Open Business Models



Getting Started: Introduction to Open Business Models

Learn More: Articles & Books on Open Business Models

Center Projects and Research in Open Business Models


Getting Started: Introduction to Open Business Models

Briefly:

“Companies that keep their intellectual property too close to the vest risk missing out on critical business innovations that idea-sharing could generate. Open business models foster collaboration with customers and suppliers to everyone's benefit.

The more companies learn about open business models, the more they realize how much they have to change their own innovation activities to take full advantage of these paradigms. It's not simply a matter of searching for new technologies. To thrive, companies must adapt their business models to make them more open to external ideas and paths to market.”

Henry Chesbrough, "Embracing Open Business Models”, Optimize Magazine, 1/1/07


“Consider the definition of innovation. It used to be synonymous with invention. It was the realm of R&D exclusively. In the new model, it’s about commercialization. It’s about business model innovation as much as product. The integration of the two extends the process across the organization.

Which is more important: better technology or a better business model? Engineers favor technology. MBAs favor the business model. The ability to profit, scale, acquire external technology favors the business model as the more valuable.”

Chas Martin, Innovativeye


“Innovation in the business model is one of the most profound ways to differentiate a business and turn the tables on competition. In Open Business Models, Henry Chesbrough rethinks the traditional approach to business from the ground up. This book should be read by anybody who wants to understand how to innovate in the 21st century global economy.”

Nathan Myrhvold, Formerly Microsoft CTO


“Most companies early on are trying to make a little extra money for their unused IP. Over time, however, as companies gain experience and confidence, they see more strategic ways to employ licensing. One of them is suggested in your question: to leverage other companies’ business models. This means that the company watches what the other companies are doing with their technologies, and learning from that experience. In many cases, the licensees have developed a different business model that finds value in a technology that the licensor did not perceive. In other cases, a licensee sees the market and technology trends differently. In either case, companies have begun to figure out that having a number of interested licensees for one of your technologies is a powerful signal that this technology may be more valuable than you realize.”

Henry Chesbrough, PDMA Visions Magazine



For a brief introduction to Open Business Models, click any of these links:



For a book-length introduction to Open Business Models, see:

Open Business Models: How to Thrive in the New Innovation Landscape, Harvard Business School Press Books, 2006.  [Google Books]

In his landmark book Open Innovation, Henry Chesbrough demonstrated that because useful knowledge is no longer concentrated in a few large organizations, business leaders must adopt a new, "open" model of innovation. Using this model, companies look outside their boundaries for ideas and intellectual property (IP) they can bring in, as well as license their unutilized home-grown IP to other organizations.  In Open Business Models, Chesbrough takes readers to the next step--explaining how to make money in an open innovation landscape. He provides a diagnostic instrument enabling you to assess your company's current business model and explains how to overcome common barriers to creating a more open model. He also offers compelling examples of companies that have developed such models--including Procter & Gamble, IBM, and Air Products. In addition, Chesbrough introduces a new set of players--"innovation intermediaries"--who facilitate companies' access to external technologies. He explores the impact of stronger IP protection on intermediate markets for innovation and profiles firms (such as Intellectual Ventures and Qualcomm) that center their business models on innovation and IP.

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Learn More: Articles and Books on Open Business Models


Open Business Models news stories

Chesbrough, H. (2007), “Microsoft Should Welcome Piracy in India and China,” BusinessWeek, 7/26/07.

Chesbrough, H. (2007), “Why Bad Things Happen To Good Technology,” Wall Street Journal, 4/28/07, [reprinted in MIT Sloan Management Review]

Chesbrough, H. (2007), “Productivity Crisis in R&D”, Forbes, 1/26/07.


Open Business Models journal articles
[may require subscription] br /> Chesbrough, Henry (2007), “Business model innovation: it's not just about technology anymore,” Strategy & Leadership, 35:6, pp. 12-17. DOI: 10.1108/10878570710833714.

Chesbrough, Henry (2007), “Why Companies Should Have Open Business Models ,” MIT Sloan Management Review, 48:2 (Winter), pp. 22-28.

Chesbrough, Henry and Schwartz, Kevin (2007) “Innovating Business Models with Co-Development Partnerships ,”. Research Technology Management, Jan/Feb2007, Vol. 50:1 (Jan/Feb), pp. 55-59.



Books

Three books by COI Executive Director Dr. Henry Chesbrough tackle the subject matter from different perspectives:

Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press Books, 2003.  [Google Books]

In his landmark book Open Innovation, Henry Chesbrough demonstrated that because useful knowledge is no longer concentrated in a few large organizations, business leaders must adopt a new, "open" model of innovation. Using this model, companies look outside their boundaries for ideas and intellectual property (IP) they can bring in, as well as license their unutilized home-grown IP to other organizations.

Open Business Models: How to Thrive in the New Innovation Landscape, Harvard Business School Press Books, 2003.  [Google Books]

In Open Business Models, Chesbrough takes readers to the next step--explaining how to make money in an open innovation landscape. He provides a diagnostic instrument enabling you to assess your company's current business model and explains how to overcome common barriers to creating a more open model. He also offers compelling examples of companies that have developed such models--including Procter & Gamble, IBM, and Air Products. In addition, Chesbrough introduces a new set of players--"innovation intermediaries"--who facilitate companies' access to external technologies. He explores the impact of stronger IP protection on intermediate markets for innovation and profiles firms (such as Intellectual Ventures and Qualcomm) that center their business models on innovation and IP.

Open Innovation: Researching a New Paradigm (with Joel West and Wim Vanhaverbeke; Oxford University Press, 2006.  [Google Books]

An edited volume of research contributions, all informed by the Open Innovation perspective. Open Innovation describes an emergent model of innovation in which firms draw on research and development that may lie outside their own boundaries. In some cases, such as open source software, this R&D can take place in a non-proprietary manner. Chesbrough and his collaborators investigate this phenomenon, linking the practice of innovation to the established body of innovation research, showing what's new and what's familiar in the process. Offering theoretical explanations for the use (and limits) of open innovation, the book examines the applicability of the concept, implications for the boundaries of firms, the potential of open innovation to prove successful, and implications for intellectual property policies and practices.



Center Projects and Research in Open Business Models

Open Business Models, Intellectual Property, and Innovation

[this section under construction; needs update & expansion]

Many concerns have been raised about the ability of advanced economies to continue to innovate at the pace of the past half-century. But hidden among these worrisome trends are other developments that are perhaps more hopeful for the future of innovation. One of the most important of these trends is the growing division of innovation labor that is emerging in a variety of industries. By a new division of labor, I mean a system where one party develops a novel idea, but does not carry this idea to market themselves. Instead, the party partners with or sells the idea to another party, and this latter party carries the idea into the market. This new division is driving a new organizational model of innovation, one that may offer highly attractive prospects for innovation. And companies are building or changing to open business models to exploit the opportunities available in this new model of innovation.

Projects within this area include:



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