Companies commercialize new ideas and technologies through their business models. While companies may have extensive investments and processes for exploring new ideas and technologies, they often ...have little if any ability to innovate the business models through which these inputs will pass. This matters - the same idea or technology taken to market through two different business models will yield two different economic outcomes. So it makes good business sense for companies to develop the capability to innovate their business models.
This paper explores the barriers to business model innovation, which previous academic research has identified as including conflicts with existing assets and business models, as well as cognition in understanding these barriers. Processes of experimentation and effectuation, and the successful leadership of organizational change must be brought to bear in order to overcome these barriers. Some examples of business model innovation are provided to underline its importance, in hopes of inspiring managers and academics to take these challenges on.
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The term "open innovation" was introduced in my 2003 book, which outlined a new model for industrial innovation. Since that time, the concept has been adopted by hundreds of academic articles and ...been incorporated into the innovation practices of a similarly large number of companies. At the editors' invitation, this article reviews this recent history and offers a perspective on where open innovation is going in the future.
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Back in 2004, I sat in Paul Horn's office at IBM. We had a wonderful conversation about innovation, and the many successes IBM had obtained from its research activities. At the end of our time, I ...asked Horn a final question: What is your biggest problem today? Horn told me that his biggest problem was that his research activities were geared to support a company that made products. But most of IBM's revenues were coming from services, not from its products. The challenge Horn articulated in that conversation was not unique to IBM. In fact, the challenge of how to innovate in services is one that faces not just individual companies but also entire countries.
The future of open innovation Gassmann, Oliver; Enkel, Ellen; Chesbrough, Henry
R & D management,
June 2010, Volume:
40, Issue:
3
Journal Article
Peer reviewed
Open access
Institutional openness is becoming increasingly popular in practice and academia: open innovation, open R&D and open business models. Our special issue builds on the concepts, underlying assumptions ...and implications discussed in two previous R&D Management special issues (2006, 2009). This overview indicates nine perspectives needed to develop an open innovation theory more fully. It also assesses some of the recent evidence that has come to light about open innovation, in theory and in practice.
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When it comes to agility, startups have an edge over large corporations—whereas large corporations sit on resources which startups can only dream of. The combination of entrepreneurial activity with ...corporate ability seems like a perfect match, but can be elusive to achieve. This article examines how large corporations from the tech industry have begun to tap into entrepreneurial innovation from startups. Prominent examples are used to inductively derive a set of four models commonly used to engage with startups and to describe their characteristics, challenges, and rationales. While corporate equity is the key mechanism behind more established models, newer approaches replace equity with shared technology to connect both worlds with fewer organizational costs and greater speed and agility. This article presents a typology of corporate mechanisms to engage with startups that balance speed and agility against control and strategic direction, to map the ways companies can bridge the gap between themselves and the startup world.
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Open innovation has attracted a significant amount of attention from scholars and practitioners. Prior research on open innovation has mainly focused on collaborative inventing. However, ...understanding the processes and outcomes of joint inventing is not sufficient for understanding sustained open‐innovation activities and the competitive advantages of the actors involved in open innovation. Instead, an understanding of value creation and value capture is paramount for advancing our understanding of sustained open‐innovation activities. Open innovation requires collaboration among distributed but interdependent actors who rely on each other’s capabilities for value creation and capture. Value in open innovation is driven not only by actors’ value creation but also by their ability to capture value. While value creation and value capture are discussed in the open‐innovation literature, the advancement of this stream of research is hindered by conceptual ambiguity, especially in relation to the concept of value capture. This article adopts a value perspective on open innovation, offers consistent conceptualizations of value creation and value capture, and outlines potential avenues for further research at the interface of open innovation, value creation, and value capture.
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Because of two trends -- rising R&D costs and decreased product revenues (due to shorter product life cycles) -- companies are finding it increasingly difficult to justify investments in innovation. ...Business models that embrace open innovation address both issues. The development costs of innovation are reduced by the greater use of external technology in a firms own R&D process. This saves time, as well as money. And the firm no longer restricts itself to the markets it serves directly. Now it participates in other segments through licensing fees, joint ventures and spinoffs, among other means. These different streams of income create more overall revenue from the innovation. To partake more fully in the benefits of open innovation, companies need to develop the ability to experiment with their business models, finding ways to open them up. Building that capability requires the creation of processes for conducting experiments and for assessing their results. Although that might seem obvious, many companies simply do not have such processes in place. In most organizations, no single person short of the CEO bears responsibility for the business model. Instead, business unit managers (who are usually posted to their jobs for just two to three years) tend to take the business model for granted. To understand how an organization can open its business model, the author provides case examples of IBM, P&G and Air Products, three companies that operate in different industries with vastly different technologies and products. Each used to function with a very internally focused, closed business model. And each has since migrated to a business model that is substantially more open. PUBLICATION ABSTRACT
Purpose - To innovate the company business model, executives must first understand what it is, and then examine what paths exist for them to improve on it. This article aims to examine this ...issue.Design methodology approach - The article provides a practical definition of business models and offers a Business Model Framework (BMF) that illuminates the opportunities for business model innovation.Findings - The article finds that BMF sequences possible business models from very basic (and not very valuable) models to far more advanced (and very valuable) models. Using the BMF, companies can assess where their current business model stands in relation to its potential and then define appropriate next steps for the further advancement of it.Practical implications - An organization must give a senior manager the resources and authority to define and launch business-model experiments.Originality value - The article provides a cogent model for assessing the potential for new business model innovation, a framework for carrying it out and a management plan for decision making.
Chez Panisse Chesbrough, Henry; Kim, Sohyeong; Agogino, Alice
California management review,
08/2014, Volume:
56, Issue:
4
Journal Article
Peer reviewed
The case study provides a history of Chez Panisse and Alice Waters. Throughout Chez Panisse's history, Waters and her team had built a local and now global ecosystem using an “open innovation” ...strategy with stakeholders such as suppliers, alumni chef and staff, food writers, and others. The Chez Panisse ecosystem case study uses an open innovation framework to analyze how Chez Panisse grew. The case study allows students to learn how a small firm thrived and became a business success based on building a successful business ecosystem that shares knowledge, encourages individuals' growth, and embeds trust among participants.
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The Future of Open Innovation Chesbrough, Henry
Research technology management,
2017, Volume:
60, Issue:
1
Journal Article
Peer reviewed
Open innovation works. Since the appearance of my book Open Innovation in 2003, substantial evidence has accumulated showing that open innovation can improve business performance. The open innovation ...paradigm as I've defined it is best understood as the antithesis of the traditional vertical integration model in which internal innovation activities lead to internally developed products and services that are distributed by the firm. In a sentence, open innovation is a distributed innovation process that relies on purposively managed knowledge flows across organizational boundaries, using pecuniary and nonpecuniary mechanisms in line with the organization's business model to guide and motivate knowledge sharing (see Chesbrough and Bogers 2015, p. 3). The open-source world also treats intellectual property (IP) as a barrier to innovation, ideally one that should be eliminated (see, for instance, von Hippel 2005).2 Indeed, in the closed innovation model, intellectual property was conceptualized primarily as a barrier: companies accumulated intellectual property to provide design freedom to their product developers. In open innovation, by contrast, intellectual property becomes not a barrier or a bulwark but rather a new class of assets that can deliver additional revenues and also point the way toward new businesses and new business models. ...one persistent paradox-described in my Open Innovation (2003)-was the surprising ability of Cisco to keep up with Lucent's Bell Labs. Lucent devoted enormous resources to fundamental research, exploring new materials and components to fuel future generations of products and services. "In this way," I wrote, "Cisco kept up with the R&D output of...
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