Henry William Chesbrough

University of California, Berkeley | UCB · Garwood Center for Corporate Innovation

Research Summary While there is a wealth of literature on the benefits of open innovation (OI), little is known about when do latecomer firms undertake international open innovation (IOI) given the related benefits and challenges. This study examines how the characteristics of firms and their surrounding environment affect their engagement with int...

Companies that are experienced in open innovation integrate open 7 innovation activities as part of their strategy. By contrast, open innovation research 8 has not been adequately integrated into the strategy literature and vice versa. In this 9 chapter, we discuss a number of existing strategy fields that offer inroads to connect 10 open innovatio...

Companies that are experienced in open innovation integrate open innovation activities as part of their strategy. By contrast, open innovation research has not been adequately integrated into the strategy literature and vice versa. In this chapter, we discuss a number of existing strategy fields that offer inroads to connect open innovation to stra...

The explicit goal of the inaugural World Open Innovation Conference (WOIC) was to attract both leading academic researchers in open innovation and leading industry practitioners of open innovation, seeking to get these two groups to engage with one another. This introductory article sets the intellectual context of the WOIC, summarizes the “top” fo...

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...

3.1 INTRODUCTION Open innovation and open business models have received a lot of atten-tion during the last decade both from practitioners and academia since Henry Chesbrough launched the two concepts respectively in 2003 and 2006 (Chesbrough, 2003a and 2006a). Careful observation of publications about these two concepts reveals that most researche...

This paper examines the determinants of open innovation as a response to the constraints and risks of innovation that firms face in emerging economies. A recent national firm-level survey of 1,400 firms in the manufacturing sector is used as the basis of the analysis. We find that institutional, financial and knowledge/skills-related risks and cons...

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...

OVERVIEW: We surveyed 125 large firms in Europe and the United States with annual sales in excess of $250 million to examine the extent to which large firms are now practicing open innovation. Our results showed that open innovation is not a passing fad: 78 percent of the firms report practicing open innovation, none have abandoned it, and 82 perce...

Pharmaceutical drug development costs have risen rapidly over the past twenty years. Yet, the number of new molecular entities being approved has not increased. Most of these costs can be traced to work on compounds that are abandoned before getting to market. As pharmaceutical companies scale back their work in light of deteriorating R&D productiv...

The Garwood Center for Corporate Innovation at the University of California, Berkeley, in the US and the Fraunhofer Society in Germany have teamed up to conduct the first large sample survey of open innovation adoption among large firms that we know of. Surveying large firms in both Europe and the US with annual sales in excess of US$ 250 million,...

This chapter explains the business model concept and explores the reasons why “innovation” and “innovation in services” are no longer exclusively a technological issue. Rather, we highlight that business models are critical components at the centre of business innovation processes. We also attempt to describe the characteristics of a business model...

OVERVIEW: 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...

This GE ecomagination Challenge case study takes place in 2010 when Beth Comstock, chief marketing officer and senior vice president of General Electric, was planning a meeting with GE's CEO Jeffrey Immelt. The pair plan to discuss the company's ecomagination Challenge, an open innovation process that solicited energy ideas from individuals and sta...

Industrial innovation processes are becoming more open. The large, vertically integrated R&D laboratory systems of the 20th century are giving way to more vertically disintegrated networks of innovation that connect numerous companies into ecosystems. Since innovation policy ultimately rests on the activities and initiatives of the private sector,...

The world's developed economies are increasingly oriented around services, with services comprising more than 70% of aggregate gross domestic product and employment in the Organization for Economic Cooperation and Development countries. As a result, both individual companies and entire economies face the challenge of how to innovate in services. In...

Our knowledge of the impact of technical change upon innovating firms is often derived from evidence gathered from one country, while those lessons are proffered to firms around the world. Evidence is building, however, that firms in different institutional environments organize differently, in the same industry undergoing the same technical change...

Service innovations represent an important way for firms to retain their competitive advantage as products become increasingly commoditized. To do so, firms need to think of their businesses as a services business, engage customers in the service innovation process, and employ open innovation as a means to accelerate and deepen service innovation....

Il primo libro di Henry Chesbrough, "Open Innovation," era riuscito a definire un nuovo paradigma per il management del 21 secolo; con "Open Services Innovation, "che appare ora tradotto in italiano, l autore ci spiega come l Innovazione Aperta, associata a una rivalutazione del ruolo dei servizi, puo portare le imprese a scoprire nuove opportunita...

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 o...

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 marke...

As the many chapters in this volume agree, there is growing awareness of the importance of services innovation to the prosperity of advanced economies in the 21st century. In this chapter, we explore the challenges that services innovation poses, as well as the potential value it may create. The conceptual differences between products and services...

This is the second of a two-case series (308-225-1 and 308-226-1). IMEC ? a successful Belgian research institute in nano-electronics - represents an innovative and successful open innovation response to the growing challenges of technology innovation in the semiconductor industry. IMEC offers a creative public-private partnership approach to pursu...

This paper examines how multinational corporations (MNCs) protect their intellectual property (IP) when they conduct R&D in countries with weak IP rights (IPRs) protection. Findings from a small-scale survey and three case studies in China show that hierarchical segmentation of the R&D process can provide an effective way for IPR protection. Furthe...

A recession often forces you to cut R&D as you refocus on your core. But innovation need not go by the wayside. By placing certain assets and projects outside your walls, you can actually preserve opportunities for future growth while you shore up the fortress. Chesbrough, of Haas School of Business, and Garman, of New Venture Partners, identify fi...

There is currently a broad awareness of open innovation and its relevance to corporate R&D. The implications and trends that underpin open innovation are actively discussed in terms of strategic, organizational, behavioral, knowledge, legal and business perspectives, and its economic implications. This special issue aims to advance the R&D, innovat...

Traditional closed business models have recently shown their limitations. In this paper we explore the role of key resources, and how they can be aggregated into open business models. We first examine how the nature of key resources influences the development of these models. We pay particular attention to whether the resources are rivalrous or non...

Five strategic moves will help you reduce the costs of supporting R&D today while preserving opportunities for growth tomorrow.

Los modelos de negocio cerrados tradicionales han mostrado recientemente sus limitaciones. En este artículo se analiza el papel de los recursos clave de una empresa y como pueden ser agregados en modelos de negocio abiertos. Primero, exploraremos cómo la naturaleza de los recursos afecta a la configuración de los modelos de negocio abiertos. Presta...

Part of the advantages of using open innovation (compared to closed innovation) in corporate venturing can be explained by applying the real options approach. Open innovation in risk-laden activities such as corporate venturing has the following advantages: (i) benefits from early involvement in new technologies or business opportunities; (ii) dela...

The aim of this paper is to provide a comprehensive perspective for understanding the dynamics of modularity and the implications of those dynamics for innovation networks. The main contention of this paper is that the dynamics of technology development should reflect the dynamics of a firm network. During the early development of a technology, whe...

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 research and development can take place in a non-proprietary manner. Henry Chesbrough and his collaborators investigate this phenomenon, linking the pr...

This study asks how a firm's market orientation influences its returns to R&D investment and its capability to benefit from external technology opportunities brought about by the globalization of manufacturing and innovation activities. We use a panel of firm-level data on production and R&D activities to study China's semiconductor industry. Build...

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 th...

We explore the technological evolution of three microprocessor firms between 1976 and 2004. We trace how two initially small entrants (Intel and AMD) competed against a larger and more established incumbent (IBM). We show that changes in interfirm relationships (as reflected by competitive and cooperative events) affect patenting strategies. Period...

The increasing adoption of more open approaches to innovation fits uneasily with current theories of business strategy. Traditional business strategy has guided firms to develop defensible positions against the forces of competition and power in the value chain, implying the importance of constructing barriers rather than promoting value creation t...

The strengthening of intellectual property protection in the United States has important implications for corporate strategy. Increasingly, firms are both selling intellectual property that they have developed and are purchasing it from other firms. The growth of a secondary market for innovation implies a new business model based on the ability of...

Business model innovation is vital to sustaining open innovation. External technology partnerships allow open business models to accomplish even more. One important mechanism for innovating one's business model is through establishing co-development relationships. The proper character of these relationships varies, depending on the context for the...

This introductory essay reviews the key contributions of David Teece's landmark paper “Profiting from Innovation” published in research policy in 1986. It summarises the contributions of each of the papers in the special issue. It then offers some perspectives on the key themes emerging from these papers, and on the broader challenges facing resear...

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 research and development can take place in a non-proprietary manner. Henry Chesbrough and his collaborators investigate this phenomenon, linking the pr...

A service science discipline to integrate across academic silos and advance service innovation more rapidly is discussed. Today services means jobs and growth, but the companies who have been leading the charge lack a strong conceptual foundation for their work and are now reaching out to academics. There are elements common across many different t...

Companies have historically invested in large research and development departments to drive innovation and provide sustainable growth. This model, however, is eroding due to a number of factors. What is emerging is a more open model, where companies recognize that not all good ideas will come from inside the organization and not all good ideas crea...

The market at the "bottom of the pyramid" represents an important business opportunity, provided that managers understand the challenges of reaching this huge market segment. The difficulties in designing and introducing new products and technologies are generally attributed to the lack of understanding of the local environment in these countries....

A paradigm shift is occurring in how companies commercialize knowledge, from Closed Innovation to Open Innovation. The Open Innovation paradigm assumes that firms can and should use external as well as internal ideas, and internal and external paths to market, as they look to advance their technology. It assumes that internal ideas can also be take...

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Industrial innovation is becoming more open, requiring changes in how firms manage innovation. External sources of knowledge become more prominent, while external channels to market also offer greater promise. This complicates the evaluation of early-stage technology projects, which often involve significant technical and market uncertainty. In suc...

Corporate venture capital (CVC) programs have followed a strongly cyclical pattern in response to the ebbs and flows of the private and public equity markets. However, the role of these programs inside the firm has received far less study. What role do corporate venture programs play inside large corporations, beyond any financial returns they gene...

Our understanding of the interaction between technological structure and organizational structure has made many advances. This chapter argues that a more dynamic conception of the relationship is necessary in order to capture important elements that otherwise go unnoticed. Illustrations of a dynamic conception are offered, based on empirical resear...

Harvard professor Henry Chesbrough takes a look at leading-edge companies' latest moves to harvest ideas from outside and to benefit from sharing their own R&D with others--even with competitors.

Lucent's New Ventures Group launched 35 ventures out of Bell Laboratories technologies. Not withstanding this success, NVG has been forced to change its funding approach. It has now evolved into a partnership with private equity capital suppliers called New Venture Partners. This partnership addresses some structural limits upon a public corporatio...

Firms need to access skills, capital and customers to enter into an industry initially and the choices they make to access these resources are likely to exert path dependent influences over subsequent entry behavior into new sub-markets. This paper explores how firms configure themselves to access skills, capital and customers and reports data on t...

Companies have traditionally managed innovation as an internal process, relying upon their own skills and capabilities. However, this closed approach to innovation is no longer viable in a period of rapid diffusion of commercially valuable knowledge. If leading firms are to retain their capacity for innovation, they must begin to manage intellectua...

Companies that conduct internal research cannot fully specify the output from that research in advance. Inevitably, spillovers may result. A company might choose to create a technology spin-off company to realize value from such research spillovers. But how is such a spin-off to be governed? Effective spin-off governance structures in a highly unce...

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Is innovation dead? Actually, innovation is alive and well ¿ as underscored by the recent advances in the life sciences, including revolutionary breakthroughs in genomics and cloning. But the way companies generate ideas and bring them to market has been undergoing a fundamental change. In the old model of closed innovation, enterprises adhered to...

The Xerox Corporation has devised several strategies for managing the numerous spin-off firms that independently commercialized many of its technologies. From 1979 to 1998, thirty-five technology-based organizations emerged from Xerox's research centers. Contradicting the common perception that Xerox “fumbled the future” by letting its technology w...

This paper explores the role of the business model in capturing value from early stage technology. A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. The business model unlocks latent value from a technology, but its logic constrains the subsequent search for new, alternat...

Large companies have long sensed the potential value of investing in external start-ups, but more often than not, they fail to get it right. Remember the dash to invest in new ventures in the late 1990s and the hasty retreat when the economy turned? This article presents a framework that will help a company decide whether it should invest in a part...

Firms need to access skills, capital and customers to enter into an industry initially and the choices they make to access these resources are likely to exert path dependent influences over subsequent entry behavior into new sub-markets. This paper explores how firms configure themselves to access skills, capital and customers and reports data on t...

This paper explores the role of the business model in capturing value from early stage technology. A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. The business model unlocks latent value from a technology, but its logic constrains the subsequent search for new, alternat...

This paper reviews 16 empirical studies of the impact of technological change upon incumbent firms. While all 16 studies have strong internal validity, their external validity is unclear. These studies employ different definitions, use different taxonomies, and rely on differing causal mechanisms. Their evidence, though extensive, draws largely upo...

Business incubators such as Hotbank, CMGI, and Idealab! are a booming industry. Offering office space, funding, and basic services to start-ups, these organizations have become the hottest way to nurture and grow fledgling businesses. But are incubators a fleeting phenomenon born of an overheated stock market, or are they an important and lasting w...

Private venture capital casts a long shadow over corporate ventures, in part because they compete for the same entrepreneurial talent. Corporate venturing may improve its performance by emulating certain practices of private venture capital but will never achieve the structures that private venture capital can create. Instead, the design principles...

Interest grows in the use of corporate venture capital as a way of unlocking the hidden potential of technologies which lie inside private central research labs and do not fit with established businesses. The experience of the New Ventures Group within Lucent Technologies illustrates both the challenges and the opportunities of using venture capita...

This paper analyses how US, Japanese, and European HDD firms responded to technological shifts in the hard disk industry from 1973 through 1996. Leading incumbent US HDD firms were frequently forced out of the market. Leading Japanese incumbent firms in the same industry, however, were not displaced by these changes. US startup firms thrived under...

This paper offers a parsimonious theory of national institutional factors that promote or inhibit the formation of start-up firms in the USA and Japan. Three factors are proposed: the technical labor market, the venture capital market and the structure of buyer-supplier ties. Complementarities between these factors cause them to work as a system, w...

Advances in information technology have made it easier for companies to exchange data and coordinate activities. That has given rise to a radical new vision of corporate organization-one in which individual companies outsource many oftheir activities to an array of partners. Such virtual enterprises may be more efficient, but what are the broader s...

A response by the authors is presented to letters to the editor about the article "When is Virtual Virtuous? Organizing for Innovation," from the January-February 1996 issue.