Open Innovation is a paradigm promoted by Henry Chesbrough that expands on the ideas of interbusiness collaboration. Over the last decade or so it has been primarily attributed to Dr. Chesbrough from his position as adjunct professor and faculty director of the Center for Open Innovation at the Haas School of Business at the University of California and as the author of the book “Open Innovation: The New Imperative for Creating and Profiting from Technology” (Harvard Business Press, 2003).
Dr. Chesbrough recommends that companies embrace the idea of ‘Open Innovation’, which very simply means obtaining the required components or building blocks of the development and manufacturing process from any source available, whether it is domestic or not. He further suggests that even though there is some risk of losing competitiveness because of the loss of a competitive advantage due to the sharing of potentially sensitive information with partners (and consequently competitors) in the manufacturing process, the overall gains far outweigh the risks.
The Chesbrough Open Innovation model incorporates such concepts as the ‘Collaborative Network’, which is a structured system that works as a unit to achieve a particular goal regardless of the locations, circumstances or ideologies of the constituent parts; ‘Innovative Networks’, ‘Data Networks’ and others.
Proponents of the system in the manufacturing sector suggest that development marketing, research and distribution costs may be greatly reduced by making use of facilities, knowledge and structures already in existence. Naysayers point out the risks to individual companies such as loss of such things as proprietary knowledge, competitive edge and even profit may render some business obsolete or defunct.
Dr. Chesbrough firmly believes that the overall gains to innovation, business and even humanity far outweigh these considerations. Certainly, examples abound where this process has worked marvelously for all concerned; Case in point MS-DOS vs. Apple Macintosh for computer dominance. Clearly the overwhelming profusion of developers and the size of the existing market share that Microsoft maintains smothered the Macintosh during the early skirmishes between the two giants. Providing a working platform that enables developers to innovate and expand on existing structures enables better, cheaper and more reliable products for consumers and profits for all the parties concerned.
Another example of where Chesbrough Open Innovation has served well in the marketplace is the profusion of apps for Android and iPhones. Whichever you prefer, there is no doubt that the ability of developers to create and innovate has been to the benefit of everyone who now uses a mobile phone.
All of which would tend to suggest that the Chesbrough Open Innovation model is a practical success.