Reinventing

the Company
in the Digital Age
 Reinventing
the Company
in the Digital Age
 Open Innovation: Striving for
Innovation Success in the 21st Century

Henry Chesbrough

Longstanding expert and pioneer in the field Professor Chesbrough feels

there is much confusion surrounding what open innovation is exactly, and
he goes on to define it as “the use of purposive inflows and outflows of
knowledge to accelerate internal innovation and expand the markets for
external use of innovation.” He continues by explaining and giving exam-
ples of “outside-in and inside-out” open innovation models. Chesbrough
sees open innovation expanding well beyond simple collaboration between
two firms and he believes designing and managing innovation communities
will become increasingly important for the development of open innovation.
In this way open innovation’s effectiveness is not restricted to a few select
corporations; it makes more effective use of internal and external knowl-
edge in every single type of organization.
Henry Chesbrough
Haas School of Business, University of California at Berkeley

Henry Chesbrough is Faculty Director of the Garwood Center for Corporate

Innovation at UC Berkeley’s Haas School of Business. He also holds a position
at Esade Business School in Ramon Llull University in Spain. He is a scholar of
managing technology and innovation, and best known as the father of Open
Innovation. Previously he was an assistant professor at Harvard Business School,
and before that a product manager and later Vice President of Marketing at
Quantum Corporation, a manufacturer of hard disk drives. He holds a BA from
Yale University, an MBA from Stanford University, and a PhD from the
University of California-Berkeley.

Key Features for the Company of the Future:

Be Open Embrace Failure Innovate the Business

Not all of the smart people Innovation cannot Model, Not Just the
work for your company. occur without risk, and no Technology
It will be paramount for company is able to innovate A better business model
your smart people to find effectively unless they learn often beats a better
and collaborate with the how to manage this risk. If technology. Companies that
other smart people working you have never failed, this are successful often become
elsewhere in the world, in means that you have not trapped by their business
order for your company to be attempted anything very model. Learn how to
successful in innovation. important! Creating a culture improve or even change your
in the company that can business model, so that you
celebrate useful failure, can continue to thrive even
and also learns from it, is after your business model
essential to succeeding becomes obsolete.
with innovation later on.
 Open Innovation: Striving for Innovation
Success in the 21st Century

Introduction

In this article, I will take the opportunity to reflect upon the activities in an
area where I have been privileged to play an important role in both defining
and developing the field: open innovation.
My 2003 book titled Open Innovation outlined a new model for industrial
innovation. Since that time, the concept has been cited by thousands of aca-
demic articles and adopted by the majority of large firms in the US and Europe.
Open innovation has changed the management of innovation, as witnessed by
the plethora of managers with “open innovation” in their job titles. In this
short article, I want to go back to the beginning of the concept, and then use
that review to project forward into a possible future for open innovation, and
the management of innovation more generally, for a company striving to suc-
ceed in the twenty-first century.
When I wrote Open Innovation in 2003, I did a Google search on the term
“open innovation,” and I got about 200 links that said “company X opened its
innovation office at location Y.” The two words together really had no meaning.
When I conducted a search on that same term last week, I found 483 million

Henry Chesbrough 5
links, most of which were about this new model of innovation. There have
been hundreds of academic articles written on the open innovation approach,
along with a number of industry conferences on the topic, and there is even
an annual PhD conference that trains dozens of new scholars each year, all of
whom are writing dissertations on aspects of open innovation.
However, the words “open innovation” are defined differently by differ-
ent people, making it more challenging for people outside academia to apply
its concepts effectively in practice. Just as Eskimos have dozens of words for
“snow,” the term “open innovation” has acquired multiple meanings.
In my own view, the open innovation paradigm can be understood as
the antithesis of the traditional vertical integration model in which internal
innovation activities lead to internally developed products and services that
are then distributed by the firm. The vertically integrated model is what I term
a closed innovation model. Put into a single sentence, 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.”2
Open innovation assumes that firms can and should use external ideas as well
as internal ideas, and internal and external paths to market, as they look to advance
their innovations. Open innovation processes combine internal and external ideas
together into platforms, architectures, and systems. Open innovation processes
utilize business models to define the requirements for these architectures and sys-
tems. These business models access both external and internal ideas to create value
while defining internal mechanisms to claim some portion of that value.
There are two important pathways for ideas to flow in open innovation:
outside-in and inside-out. The outside-in part of open innovation involves
opening up a company’s innovation processes to many kinds of external
inputs and contributions. It is this aspect of open innovation that has received
the greatest attention, both in academic research and in industry practice.
Inside-out open innovation requires organizations to allow unused and
underutilized ideas to go outside the organization for others to use in their
businesses and business models. In contrast to the outside-in branch, this
portion of the model is less explored and hence less well understood, both in
academic research and also in industry practice.

A Schism in Open Innovation Definitions

There is another definition of open innovation out there, one that builds
on the concept of open-source software. This approach ignores the business
model and takes no account of the concept of false negative projects (or the
inside-out half of the open innovation model I present below). The work of
Eric von Hippel, for example, analyzes “open and distributed innovation,”

Open Innovation: Striving for Innovation Success in the 21st Century 6

using the example of open-source software as the motivating example for his
analysis.3 While I have taken care to clarify that open innovation is not synony-
mous with the model of open-source software, this distinction is elided in the
work of von Hippel (who does not cite my work in his analysis) and that of
his colleagues. One can infer from this omission that they are philosophically
opposed to the idea of a business model, and think that there should be little
or no IP protection for innovation either.

Open innovation is “the use of purposive inflows and

outflows of knowledge to accelerate internal innovation
and expand the markets for its external use”

There is an irony in this, because of a schism that has arisen in open-source

software itself, the very phenomenon von Hippel studies. Within that community,
there is a strong disagreement between the “free software” people and the “open
software” people. The free software people, people like Richard Stallman and oth-
ers, think that “software should be free.” Projects like the GNU operating system
were constructed using a “copy-left” approach, meaning that any use of the GNU
code must itself be shared with the rest of the GNU development community.
This is very much akin to von Hippel’s insistence that intellectual prop-
erty protection is unnecessary and indeed, unhelpful to innovation. In the
von Hippel conception of open innovation, users are expected to share their
knowledge freely within the community because as users they benefit directly
from innovation. Business models have no role to play in his conception. The
capital that organizations may require to scale their innovations (and how they
may earn a return to justify that capital) is not a question of interest. In my own
judgment, von Hippel is correct in observing the critical role that users play in
the earliest stages of innovation. However, there are important roles played
in investment capital, intellectual property, and business models in later stages
of innovation that he does not consider in his analysis.
On the other hand, a separate branch of the open-source software community
uses the term “open software,” meaning that the companies that use open code can
make additions to that code without being obligated to share those additions with
the community. Linux is organized along these lines. Companies such as Google,
which makes extensive use of Linux, have developed a variety of extensions to the
core code that have been kept private and are not shared back with the Linux com-
munity. Open software enables companies to build upon open or shared code,
investing in proprietary extensions. Both branches of the open-source movement
agree on the value of a commons from which programmers can draw useful refer-
ence designs and source code, and helpful tools for coding and testing software.
But they part company when it comes time to go to market.

Henry Chesbrough 7
 Linus Torvalds, the creator of Linux, is squarely in the “open” camp (rather
than the “free” camp). In fact, he is rather dismissive of Richard Stallman’s
evangelism for “free software”:

He’s too inflexible, too religious … I certainly am of the opinion

that open source started working a lot better once it got away from the
Free Software Foundation politics and values, and more people started
thinking about it as a tool than a religion. I’m definitely a pragmatist
[emphasis added].4

Torvalds’ pragmatic approach to open source is akin to my definition

of open innovation, in which a company utilizes a business model to sup-
port investment in a project and allows the project to scale over time. IP is
not only allowed in my view of open innovation, it actually enables com-
panies to collaborate and coordinate, confident in the knowledge that they
will be able to enjoy some protection from direct imitation by others in
the community. This is a pragmatic view of innovation, which harnesses the
contributions of users, yes, but also other important actors like investors, IP
owners, and marketing and business development people.
Both views of open innovation share the insight that being open is
a powerful generative mechanism to stimulate a lot of innovation. Von
Hippel rightly notes that users are a powerful source of innovation in the
early stages of a new product. The differences between “free” and “open”
become apparent only after the initial stage of a new product ends and
the innovation begins to gain traction in the market. At this point, hob-
byists give way to companies that come into the market to commercialize
these innovations, business models are created to seek profits, and capital
investments are required to create growth. The real social impact of an
innovation only arrives after it is commercialized and scaled in the mar-
ket. While Linux was created by Linus Torvalds and a small community
of volunteers, it is sustained today by companies like IBM that have built
business models around Linux and driven its usage in the enterprise.
To summarize the difference in brief, open innovation folks like me think
you can and should have legal regimes and business models to enable the open
process, whereas the free (or “open and distributed innovation”) people don’t.

The Open Innovation Model

My 2003 book Open Innovation is credited by Wikipedia5 and other observ-

ers as the first sustained analysis of this new approach to innovation. That
book describes a paradigm shift from a closed to an open model of innovation.

Open Innovation: Striving for Innovation Success in the 21st Century 8

Based on close observation of a small number of companies, the book docu-
ments a number of practices associated with this new paradigm.
Under the closed model of innovation, research projects are launched
from the science and technology base of the firm (Figure 1). They progress
through the development process, and some projects are stopped while
others are selected for further work. A few successful projects are cho-
sen to go through to the market. AT&T’s Bell Laboratories stands as an
exemplar of this model, with many notable research achievements but
a notoriously inwardly focused culture. Other celebrated twentieth-centu-
ry examples of this model include IBM’s TJ Watson Research Center, Xerox
PARC, GE’s Schenectady laboratories, Merck, and Microsoft Research.
(It is worth noting that each of these storied institutions has greatly altered
its innovation model in the past decade since my book was published.)
In other countries, such as Japan, the closed model remains quite popular
to this day.
This traditional innovation process is closed because projects can only
enter it in one way, at the beginning from the company’s internal base, and can
only exit in one way, by going into the market.

Figure 1. The Current Paradigm:

A Closed Innovation System

Science &
The Market
Technology Base

Research Development New Products/

Investigations Services

R D

Henry Chesbrough 9
 Figure 2. The Open
Innovation Paradigm

Internal Licensing Other Firm’s

Technology Base Market

Technology Spin-outs
New
Market

Current
Market

External
Technology Base

Technology CVC Product/Business

Inlicensing Investing Acquisition

R D

In the open innovation model, by contrast, projects may enter or exit

at various points and in various ways (see Figure 2). Here, projects can
be launched from either internal or external technology sources, and new
technology can enter into the process at various stages—the outside-in
portion of the model. In addition, projects can make their way to market
in many ways as well, such as through outlicensing or via a spin-off venture
company, in addition to going through the company’s own marketing and
sales channels. This is the inside-out part of the model. I labelled this mod-
el “open” because there are many ways for ideas to flow into the process,
and many ways for them to flow out into the market. IBM, Intel, Philips,
Unilever, and Procter & Gamble all exemplify aspects of this open innova-
tion model.
The growing acceptance of the model is due to its ability to explain
unusual anomalies that the closed model could not. For instance, open
innovation explains the surprising ability of Cisco to keep up with Lucent
and its Bell Labs in the 1990s:

Open Innovation: Striving for Innovation Success in the 21st Century 10

 Though they were direct competitors in a very technologically
complex industry, Lucent and Cisco were not innovating in the same
manner. Lucent devoted enormous resources to exploring the world of
new materials and state of the art components and systems, to come
up with fundamental discoveries that could fuel future generations of
products and services. Cisco, meanwhile, did practically no internal
research of this type.

Instead, Cisco deployed a rather different weapon in the battle for

innovation leadership. It scanned the world of startup companies that
were springing up all around it, which were commercializing new
products and services. Some of these startups, in turn, were founded by
veterans of Lucent, or AT&T, or Nortel, who took the ideas they worked
on at these companies, and attempted to build companies around them.
Sometimes, Cisco would invest in these startups. Other times, it sim-
ply partnered with them. And more than occasionally, it would later
acquire them. In this way, Cisco kept up with the R&D output of per-
haps the finest industrial research organization in the world, without
doing much internal research of its own.6

My conception of open innovation began from close observation of what

companies were actually doing and then trying to reflect on what they were
doing in relation to what I’d read as a PhD student and then as a professor.
Michael Porter’s work on business and corporate strategy was very powerful
and influential in the 1980s and 1990s, and remains so to this day. It is really
a model of closed innovation, where you figure out what your key strategic
assets are and you either go for low cost or go for differentiation or you find
a niche. You’re constantly looking for ways to compete against the other guy.
As I saw what was going on in the industry labs, it was clear that a lot of that
was happening, but there was a lot of other stuff going on that Porter’s model
didn’t really explain very well at all. These anomalies attracted my interest, and
informed my subsequent research.
As part of my research, I spent a significant amount of time at Xerox and its
Palo Alto Research Center, popularly known by its acronym, PARC. I tracked
35 projects that started inside of Xerox’s labs and got to a certain level of
development, when internal funding was stopped. I was curious about what
happened to these projects subsequently, because in many cases Xerox encour-
aged the employees working on them to leave and take them to the external
market. Once these people left the lab, budget was freed up for something that
was more strategic and promising for the company’s core business.
One of the things I discovered was that most of the 35 projects subse-
quently failed. But a few of them succeeded and actually became publicly traded

Henry Chesbrough 11
companies; the combined market value of those publicly traded spin-off entities
substantially exceeded Xerox’s own market value. That discovery really made
me think about how to better understand what was happening here and how it
would work both in a large corporation like Xerox and in a small corporation.
How could we think about a system that was more open? At Xerox, their core
business models were doing a good job of commercializing certain technical
projects that fit well with its business model. But other projects that didn’t fit
with the core found different business models that made them much more at-
tractive as standalone entities.

Open innovation treats spillovers as a

consequence of the company’s business model
—and sees them not just as a cost, but also
as an opportunity

I have come to think of these misfit projects as “false negatives,” projects

that lacked value in the context of the company’s current business model but
might have significantly more value if they could be commercialized through
a different business model. Innovation researchers have long recognized these
“false negatives,” characterizing them as spillovers from industrial R&D. In the
closed paradigm, these spillovers were regarded as a cost of doing business.
Open innovation treats spillovers as a consequence of the company’s business
model—and sees them not just as a cost, but also as an opportunity to expand
the business model or spin off a technology outside the firm to a different busi-
ness model. Managing these spillovers lies at the heart of the inside-out part of
the open innovation model.
The open innovation model also offers a second set of insights around the
treatment of intellectual property. In the closed model, companies historically
accumulated intellectual property to provide design freedom to their internal
staff. The primary objectives were to obtain freedom to operate and to avoid
costly litigation. As a result, most patents were actually worth very little to
these companies, and the vast majority were never used by the business that
held them. Lemley7 (pp.11–12) cites studies that report a large fraction of pat-
ents are neither used nor licensed by firms. Davis and Harrison8 report that
more than half of Dow’s patents were unutilized, and Sakkab9 states that less
than 10% of Procter & Gamble’s patents were utilized by any of P&G’s busi-
nesses. My experience in Europe is that the patent utilization ratio is as low, or
perhaps even lower, than it is in the US.
In open innovation, by contrast, intellectual property represents a new
class of assets that can deliver additional revenues to the current business
model and also point the way toward new businesses and new business

Open Innovation: Striving for Innovation Success in the 21st Century 12

models. Open innovation implies that companies should be both active sell-
ers of IP (when it does not fit their own business model) and active buyers of
IP (when external IP does fit their business model).
To assess the value of this insight, consider your own organization and
evaluate its patent utilization rate. Think of all the patents that your company
owns. Then ask yourself, what percentage of these patents is actually used in
at least one of your businesses? Often people don’t even know the answer,
because no one has ever asked the question. In cases where companies have
taken the trouble to find out, the percentage is often quite low, between 10
and 30%. This means that 70–90% of a company’s patents are not used. In
most companies, these unused patents are not offered outside for licensing
either. In an open innovation model, IP does not languish; it creates value,
either directly or via licensing or other inside-out mechanisms.

Innovating the Business Model

As the Xerox PARC analysis and the IP discussion show, the business model
plays a critical role in the innovation process. As I reflected further upon
this point, I realized that it warranted an entire book in its own right. This
became the motivation for my second book, Open Business Models, pub-
lished in 2006. Instead of treating the business model as fixed, as I did in
the first book, I examined the implications of being able to innovate the
business model itself.
Making business models more adaptive, I reasoned, might allow com-
panies to obtain more value from innovation, from those anomalous, false
negative projects. Had Xerox, for example, been willing to experiment with
other business models, some of the value built by 3Com, Adobe, VLSI
Technology, and other spinoffs might have accrued directly to Xerox.
The book also presented a maturity model for business models, from
commodity-type business models (offering undifferentiated products) to the
highest, most valuable kind of business model, a platform model. Platform
models are more open, because they entice third parties to innovate on your
architecture, your system, your platform. And they often enable others to
license unused technologies from you to place into other business mod-
els. This makes continued investment in R&D more sustainable and can
even confer competitive advantage. P&G, for example, is best known for its
embrace of outside-in open innovation via its Connect+Develop initiative.
But P&G also opens up its business model to license out technologies for
others to use. This isn’t as weird as it might seem, because P&G is strategic
about how, when, and on what terms it licenses those technologies. As Jeff
Weedman of P&G put it to me:

Henry Chesbrough 13
 The original view [of competitive advantage] was: I have got it, and
you don’t. Then there is the view, that I have got it, you have got it, but
I have it cheaper. Then there is I have got it, you have got it, but I got it
first. Then there is I have got it, you have got it from me, so I make money
when I sell it, and I make money when you sell it.10

While Open Business Models received substantial recognition, it has not

had the impact of the first book. However, business model innovation is
becoming a growing area of interest for many authors.11 While my book
was among the first to link innovation results to the innovation’s fit with
the prevailing business model, this is an area that is developing rapidly.
However, most organizations still treat R&D activities separately from the
design and improvement of business models. This has likely held back
progress in this area. Linking these areas more tightly is important for
advancing innovation in the future.

Open Innovation for Services

A more recent development is the consideration of how innovation occurs

in services businesses. Most of the top forty economies in the OECD get half
or more of their GDP from services. And many companies are witnessing a
shift to services as well. Xerox now gets more than 25% of its revenues from
services. IBM is another classic case, along with GE and Honeywell.
In some cases, what’s really happening is the business model is shifting,
which can turn a product business into a service business. For example, a GE
aircraft engine can be sold for tens of millions of dollars to an airframe man-
ufacturer. That same engine can also be leased to that airframe manufacturer
through the company’s Power by the Hour program. In the first case, it’s a
product transaction. In the second case, it becomes a service. What benefits
GE in the service transaction is the aftermarket sales and service, spare parts,
and other ongoing costs that accrue over the thirty-year operating life of the
engine. When it sells its engines as a product, it must compete with many
third parties to service the engine. With a Power by the Hour offering, all of
that value comes back to GE.
More generally for services, innovation must negotiate a tension between
standardization and customization. Standardization allows activities to be
repeated many times with great efficiency, spreading the fixed costs of those
activities over many transactions. Customization allows each customer to get
what he or she wants, for high personal satisfaction. The problem is that stan-
dardization denies customers much of what they want, while customization
undermines the efficiencies available from standardization.

Open Innovation: Striving for Innovation Success in the 21st Century 14

 The resolution to this dichotomy is to construct service platforms. These
platforms invite others to build on top of your own offering (the platform),
allowing for economies emerging from the standardization of the platform
along with customization created by the additions of many others to the plat-
form. A fundamental premise of open innovation is “not all the smart people
work for you.” That means that there’s more value in creating the architec-
ture that connects technologies together in useful ways to solve real problems
than there is in creating yet another
technological building block. System A successful platform
architecture, the system integration requires a business model
skill to combine pieces in useful
that can inspire and
ways, becomes even more valuable
in a world where there are so many motivate customers and
building blocks that can be brought developers and others to
together for any particular purpose. join the platform
Platform leadership to me is the
business-model side of systems integration. A successful platform requires a
business model that can inspire and motivate customers and developers and
others to join the platform. The model must be designed to allow those third
parties to create business models that work for them, even while the busi-
ness model works for the platform creator. In that way, their activities increase
the value of the core business—their investment makes the platform business
more valuable. These ideas are explored in greater length in my book, Open
Services Innovation.12

The Way Forward

While open innovation has had a strong reception since its initial launch
more than a decade ago, there is certainly more work to be done. Open in-
novation was first understood and implemented as a series of collaborations
between two organizations to open up the internal innovation process. Today,
though, we see many instances in which the concept is being used to orches-
trate a significant number of players across multiple roles in the innovation
process. Put simply, open innovation is going to expand well beyond collabo-
ration between two firms. Designing and managing innovation communities
is going to become increasingly important to the future of open innovation.
Let me illustrate this point with two distinct examples of different kinds
of community-level open innovation across a broad spectrum of activities. My
first example comes from Taiwan Semiconductor Manufacturing Corporation
(TSMC), a foundry operating in the semiconductor industry. TSMC provides
manufacturing services from its manufacturing facilities (foundries) to its

Henry Chesbrough 15
clients, who design new semiconductor chips. The customers take these chip
designs to TSMC, and TSMC fabricates the designs onto silicon wafers and
gives these back to its customers. The customers then package them into
individual chips and sell them. This saves TSMC’s customers from having to
invest in expensive manufacturing plants to manu-
facture chips. Instead, they rely on companies like Designing and
TSMC to do the fabrication work for them.
Designing chips requires customers to use a
managing innovation
variety of tools, such as reference designs and pro- communities is
cess recipes. With the growth of TSMC’s business going to become
ecosystem, many of the third-party companies increasingly
who make these tools began to take steps to
important to the
assure their customers that their offerings would
run on TSMC’s processes. This expansion in third- future of open
party tool offerings creates more design options innovation
for TSMC’s customers—a clear benefit for both
TSMC and for the customer. However, these new offerings also increase the
complexity TSMC’s customers must manage, and this complexity might
cause new chips to require redesigns or other expensive modifications to be
manufactured correctly—a clear risk.
TSMC has addressed this risk with its Open Innovation Platform (their
term, not mine!). The Open Innovation Platform starts by combining
TSMC’s many design and manufacturing services with those provided by
many third-party companies and then testing these all together. TSMC
then certifies to customers of those third-party offerings that these tools
can be used with confidence that the chip will turn out properly the
first time through the process. In this way, the Open Innovation Platform
helps TSMC’s customers get their designs manufactured on the first pass.
This avoids very expensive “turns” of the chip design, in which the chip
must be redesigned in order to be manufactured properly in volume. The
result is faster time to market for TSMC’s customers, at a lower cost of
design. So TSMC uses open innovation to manage a complex ecosystem
of internal and external design sources, simplifying the design process for
customers by guaranteeing compatibility, provided they stick to validated
resources when designing their chips.
My second example comes from GE and its recent ecomagination chal-
lenge. While GE has a very large energy business of its own, with revenues
of nearly $40 billion annually, the company has noticed a great deal of ven-
ture capital and startup activity in green and renewable energy technologies.
Recognizing its own limits, GE sought to establish a process to tap into the
ideas out there that had the potential to become promising new ventures in
renewable energy and green technology.

Open Innovation: Striving for Innovation Success in the 21st Century 16

 But GE did this in an open way. Instead of doing all the work themselves,
they enlisted four active venture capital firms who already had experience invest-
ing in this space. Together, the four venture capitalists and GE pledged a total
of $200 million to invest in attractive startup ventures. The ecomagination chal-
lenge was born. In July of 2010, the challenge was launched to the world, and
everyone was invited to submit potential project ideas for consideration for in-
vestment. More than 3,800 venture proposals were submitted. As of this writing,
23 ventures have been funded, with five other projects receiving other awards; a
people’s choice award has been given as well. While the ventures are quite young,
the venture capital firms and GE are all enthusiastic about the experience. GE’s
level of enthusiasm has led them to adapt the model to the healthcare space
(a Healthymagination challenge was launched in 2011) and also to China’s
growing market (a challenge was successfully launched there as well).
Open innovation has also moved into the public sector. My colleague Esteve
Almirall of Esade Business School is leading some fascinating research within
Europe into Open Cities. In Open Cities, local government agencies place
their data into a public repository that can be examined and utilized by others
who don’t work for the local government. Of particular interest are applica-
tion developers, who create services that employ government data to provide
new information to local citizens. The ecosystem of app developers becomes an
important resource for an Open City, and brings the activities of a local govern-
ment closer to its citizens through the click of an Android phone or an iPhone.
And one need not be a large organization to open up the innovation process
to the community. A small firm in Florida, Ocean Optics, has instituted a com-
munity innovation challenge on a much smaller scale. They received dozens of
responses, and ended up funding twen-
Open innovation’s ty different researchers on projects
that might be of great value to them in
effectiveness is not restricted the future. The organizer of these chal-
to a few select corporations. It lenges, Jason Eichenholz, subsequently
is a process that makes more spun out a new startup company, Open
effective use of internal and Photonics, to sell these services to cus-
tomers beyond Ocean Options. So this
external knowledge in every
is a game that organizations of many
organization sizes can play, if they have the vision and
determination to do so.
And that is where we’re going. Open innovation’s effectiveness is not re-
stricted to a few select corporations. It is a process that makes more effective
use of internal and external knowledge in every organization, whether old
or young, large or small, public or private. More than ten years after the first
publication of the book, we can be confident that open innovation is going
to be a part of the future for all of us.

Henry Chesbrough 17
Notes 5 11
Wikipedia, 2014. Open innovation See, for instance: B.D.
1 <http://en.wikipedia.org/wiki/ Baden-Fuller, X. Lecoq, and
This article builds upon and Open_innovation> [accessed I. MacMillan (eds.), “Business
updates an earlier paper March 25, 2014]. models,” Special Issue, Long
published by the author Range Planning 43 (2010),
in Research-Technology 6 pp. 2–3; M. Johnson, Seizing
Management in 2012, under H. Chesbrough, Open Innovation: the White Space: Business
the title “Open Innovation: The New Imperative for Creating Model Innovation for Growth
Where We’ve Been and Where and Profiting from Technology and Renewal (Cambridge, MA:
We Are Going.” (Cambridge, MA: Harvard Harvard Business Press, 2010);
Business School Press, 2003), A. Osterwalder and Y. Pigneur,
2 xviii. Business Model Generation:
H. Chesbrough, “Open A Handbook for Visionaries,
Innovation: A New Paradigm 7 Game Changers, and Challengers
for Understanding Industrial M.A. Lemley, “Rational (Hoboken, NJ: Wiley, 2010).
Innovation,” in Open Innovation: Ignorance at the Patent Office,”
Researching a New Paradigm, Northwestern University Law 12
ed. by H. Chesbrough, W. Review 95 (2001), 1495. H. Chesbrough, Open Services
Vanhaverbeke, and J. West Innovation: Rethinking Your
(New York: Oxford University 8 Business to Grow and Compete
Press, 2006), 1. J.L. Davis and S.S. Harrison, in a New Era (New York: Jossey
Edison in the Boardroom: How Bass, 2011).
3 Leading Companies Realize Value
E. von Hippel, Democratizing from Their Intellectual Assets
Innovation (Cambridge, MA: MIT (New York: Wiley, 2001).
Press, 2005).
9
4 N. Sakkab, “Connect & Develop
S. Lohr, Go To: The Story of the Complements Research and
Math Majors, Bridge Players, Develop at P&G,” Research-
Engineers, Chess Wizards, Technology Management
Maverick Scientists and 45.2 (2002), 38–45.
Iconoclasts—The Programmers
Who Created the Software 10
Revolution (New York: Perseus- H. Chesbrough, Open Business
Basic Books, 2001), 215. Models (Cambridge, MA: Harvard
Business School Press, 2006),
201.

Open Innovation: Striving for Innovation Success in the 21st Century 18

 OpenMind Channel

Article
- Open Innovation: Striving for Innovation Success in the 21st Century

About the Author

Henry Chesbrough

Related Articles
- From Deconstruction to Big Data: How Technology is Reshaping the Corporation
- Innovation Inside and Outside the Company:
How Markets for Technology Encourage Open Innovation
- Innovation by Users

Read the Full Book

- Reinventing the Company in the Digital Age

Other Books

Share