Offer your best ideas to others may seem a bad deal. However, it is best kept secret, says Henry Chesbrough, the father of open innovation. By Tom Simonit
Image: Henry Chesbrough
In the world of technology, new ideas dominate everything. But that does not mean that companies must keep their research laboratories locked. Henry Chesbrough, a professor at the Haas Business School, University of California, Berkeley, has spent years documenting the benefits of "open innovation." Chesbrough Simonit recently told Tom, editor of IT Hardware and Software Technology Review, why it works.
TR: What is open innovation?
Chesbrough: The idea that companies should make greater use of the ideas and technologies external in their own business and letting their own technologies and ideas being used by others in their business. The term originated in 2003 when I published my first book on the subject.
What are the benefits of this approach compared to keep everything within the company?
If you bring things from outside your organization, reduce time to market, because it can work with things that have already undergone a certain level of development. You can also share some of the costs of development.
In the other direction, the exchange of ideas and technologies of their own business can open new revenue streams, for example, if you sell the license or make its transformation into a new company.
Do they fear these ideas to companies accustomed to carefully maintain the new ideas for themselves?
The companies do not like to compete with their own ideas. Believe that the enemy is like selling. Companies can more easily see the benefits of bringing ideas outside the company. However, even something like the barrier faces syndrome 'this has not been invented here. " Stems from the arrogance of feeling that if something comes from outside, can not be so good, because if it were, had been developed internally.
Can you give an example a company that has successfully opened its new ideas to others?
A great example is Procter & Gamble, which has a policy that they refer to as "Use it or you're going to lose." Three years after one of its products is launched with a new technology, or five years after a patent, even if not used in the market, allowing the technology is also used by other companies. Requires a certain speed in the process of evaluating technologies.
A successful strategy is to maintain a great idea for yourself for a while and then let it be used by others only when you have already gone down next. I call it I make fans happy competitors.
In economic terms, why open innovation works?
When we look at economic fundamentals, R & D of a company is in fact a monopoly, is the only department that can provide new ideas and technology for business. The business unit is a monopsony, a single buyer, the sole purchaser of new ideas and technologies.
There are plenty of good economic reasons why the monopoly and monopsony are inefficient. Are not very innovative, because there are strong incentives to delay and slow things down. Innovation breaks open the monopoly and monopsony and enter the competition for both parties.
However, open innovation can not be without risks.
No. Intellectual property is a particular challenge. Be careful and actually owning the rights to use the ideas of others, and in fact these people have the right to give it to you. If you allow your ideas go outside, you have to pay attention and ensure that intellectual property rights are properly aligned.
What has changed over the years he has been investigating open innovation?
A big change is that companies no longer have to resolve this issue alone. Currently have the option to go for innovation intermediaries, such as InnoCentive, which helps companies through the process. [Chesbrough is on the advisory board of InnoCentive].
I have come to understand the importance of public information resources. I've been working with an organization called GreenXchange, creating patents for green and renewable technologies that are available to people all over the world and acquire the licenses used in very transparent. Should speed up technological innovation green.
just published a new book, Open Innovation Services. What have you learned about innovation in the course of your writing?
The new book looks at the services sector. When I started my research, I thought I would be writing about banking, insurance and trade shops. But I came to the view that there is a thick line of separation between technologies and products and services. The companies had been engaged in the manufacture of products and the creation of new technologies have begun to build services around them to complement and expand.
I think this is the key to restoring the strength of U.S. manufacturing Not only do we manufacture the products, are the platform on which you can then build applications and services that you and others can innovate.
Can you give an example of a technology company that has done this?
Yes, Amazon. It began as a bookseller but now offers a lot of merchandise that has nothing to do with books. Most of these things are not stocked by Amazon. Had their internal tools and technologies were available to outside marketers. You may not notice the difference, but they are third parties that manage the complexity of finding out how much stuff to store and how to distribute.
With the opening of its internal tools others, Amazon has been able to sell many more things without much of the risk from direct manipulation.
Amazon has also opened the massive infrastructure of servers built to keep the website up and running, creating a new business, Amazon Web Services. Renting your own server infrastructure provides a new source of revenue and reduce costs Amazon, increasing server utilization.
have used open innovation to achieve economies of scope, allowing the entry of other sellers, and economies of scale through its web services.
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