In this repeat episode, we honor the legacy of HBS professor Clayton Christensen, who passed away on January 23, 2020. In the high speed rail industry, the decisive role of the market and the leading role of the Party actually have aligned very effectively. The apparent success of some of these experiments challenges prevailing views of strategy. HENRY CHESBROUGH:  The good news is that if open innovation is practiced well, you should be able to do more with less. No public Twitter messages. And then within companies, there’s a parallel argument. and pay only $8.25 each, Buy 500 or above Find out how we can work together to get your problem solved. So, what are some of those issues and how can companies do a better job of bridging the gap? The apparent success of some of these experiments challenges prevailing views of strategy. But Intel by getting a royalty free non-exclusive license gets an early look at it, can get started with it and put it into production often ahead of everybody else. Which means nobody else can use this drug without the permission of the first company. HBR Innovation Collection. This case study examines the open innovation journey at Fujitsu, a global information and communication technology company. I think when the financial crisis hit in 2007, 2008, open innovation was a very new idea and people were still figuring it out. The practice is now widespread. Open Innovation: The New Imperative for Creating and Profiting from Technology. As we speak, 5G is something that is coming to cellular telephoning. So that means there isn’t as much work to be done because you’re leveraging more of the work that has already been done. HENRY CHESBROUGH:  Large organizations really do fit in well here. Open Innovation: Research, Practices, and Policies, Open Innovation: The New Imperative for Creating and Profiting from Technology, Buy 5 - 10 When you do that, most companies give some thought to how are we going to phrase the problem? Is the picture any different outside of America? My business is actually doing pretty well. But how do you turn that into a commercial product and what application would you pursue? The venture capital model works great for funding those activities. These days, because of LinkedIn, because of improvements in hiring practices and targeting for new recruits, a lot of companies are looking to hire people who have essentially already done the job before. I say, what was going on in the post war period up through the 1970s when economic productivity was growing very nicely? Instead it’s a collaborative process that involves bringing in external knowledge for your innovation activities and equally, allowing unused ideas in your organization to go outside for others to use in their innovation activities. 68-76. He had never studied aeronautical engineering or astrophysics. *FREE* shipping on qualifying offers. Dr. Henry Chesbrough is a co-founder of the Open Innovation Community and created the theory and coined the term "open Innovation." Crowdsourcing can help you reduce cost for R&D and save valuable time by creating an on-going, open conversation with your community in order to make your products and services better. In Finland in fact, in their Constitution, access to high speed internet is a constitutional right to every citizen in Finland. ALISON BEARD:  Right. By and large, they are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses. HENRY CHESBROUGH:  So, one problem you already alluded to, a lot of great research is being done in our universities. So they really understand what it is and how it works. This episode was produced by Mary Dooe. HENRY CHESBROUGH:  So, this is, the question is then who’s going to fund this? This technical note explores open innovation--initiatives that are executed with organizations or individuals outside the typical boundaries of the R&D organization. Innovation & Disruption Space tourism adventurism. So there are a number of technical risks that have to be addressed in order for this to be commercialized. It seems hard to break through the mindset though that it’s your intellectual property, it’s your patent and so you should benefit from it fully, rather than sharing in the benefits. January 28, 2020 Henry Chesbrough, adjunct professor at the University of California Berkeley Haas School of Business, coined the term “open innovation” … Henry, thanks so much for being here. hbr.org. 54. ALISON BEARD:  Isn’t that where startups and the VC industry are supposed to jump in? Many biopharmaceutical (biopharma) companies are facing a challenging research and development (R&D) environment and increased competitive pressures. This specially-priced collection brings together... Save; Share; September 24, 2014 ; Fred Khosravi and AccessClosure (B) Innovation & Entrepreneurship Case Study. What website should we put it on? ALISON BEARD:  So, what can leaders do to un-choke the process? A survey showed that 78 percent of companies in North America and Europe now employ open innovation, but there’s a problem. ... How to Capture All the Advantages of Open Innovation 01/28/2020. When you’re selling high speed rail, that’s really a government to government sale. HBR's 10 Must Reads on Innovation book. The Internet had opened up access to talent markets throughout the world. Article (PDF-310KB) It’s no secret: innovation is difficult for well-established companies. I’m Alison Beard. We’re still in the middle of the journey. ment innovation: open source development. You have the operations group. The increasing adoption of more open approaches to innovation fits uneasily with current theories of business strategy. Or, the internet helping businesses of all kinds doing business in ways no one could have imagined when the internet was just getting going. Video . It also helps you a second way. HENRY CHESBROUGH:  Some of it is to realize that you don’t get all this open innovation for free. So we did a number of things at a very large scale that dramatically improved our ability to not only generate ideas, but to disseminate them widely through the society, and then absorb them and put them to work. It used open-market innovation. Women at Work is a podcast from Harvard Business Review that looks at the struggles and successes of women in the workplace, hosted by HBR's Amy Bernstein, Amy Gallo, and Emily Caulfield. ALISON BEARD:  So, open innovation may still be working, for example, among all of the Silicon Valley companies, or in Tele Aviv, but not that’s not filtering outside of particular industries to a broad base of employees, customers, et cetera. So, what argument would you make to them for forging ahead? HBR's 10 Must Reads on Innovation book. It’s still pretty rough, pretty unproven and most venture capital funds have a 10 year life of the fund. Which involves generating, but also disseminating and absorbing new ideas in technologies. Rather, I think the infrastructure investments help to enable private investment and private entrepreneurship. And I certainly don’t want them to create state owned enterprises to conduct the activity. This is the practice of sourcing ideas outside your own organization as well as sharing your own research with others. That same factor should help you get to market faster than if you had to start from scratch inside your own organization. A report from HBR Analytic Services What we learned . and pay only $8.50 each, Buy 50 - 499 Successful innovation requires the ability to generate smart ideas AND commercialize them for success. So in addition to sharing the costs, you can also accelerate your time to market. So that’s what I call the exponential paradox. Now these discoveries can be shared with others as well, including competitors. Pisano: “In much of the writing on innovation today, radical, disruptive, and architectural innovations are viewed as the keys to growth, and routine innovation is denigrated as myopic at best and suicidal at worst. View Details. So if you can get some value, in some part of it, you can get started. HBR's 10 Must Reads on Innovation by Harvard Business School Press 294 ratings, 3.78 average rating, 16 reviews Open Preview HBR's 10 ... ― Harvard Business School Press, HBR's 10 Must Reads on Innovation. But as a society we may say, it’s actually good for everybody to have everyone have access to high speed internet. Harvard Business School Press, 2003. At the same time, many of these experimenters now are grappling with issues related to value capture and sustainability of their business models, as well as issues of corporate influence and the potential co-option of open initiatives. And if people were using the patents and practicing them, I wouldn’t be unhappy at all. You are going to need to anticipate and expand some of your capability in these areas in order to make it work. So we looked first at the high speed rail industry. Reinventing the customer experience Read the case study . Innovation management platforms that support crowdsourcing as an open innovation approach will bring these benefits to your organization: Reduce cost. Begin slowly - underline the details and sketch out the business case study description map. That makes sense. To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. And it really looks at Xhang Ping’s party congress address in the fall of 2017 where a number of important things happened and it was a three hour long speech. Executing an open innovation model. Thanks for listening to the HBR IdeaCast. HBR Case Study . So once we get in, through the research, there is something of a valley of death that sits between the completion of a research project and a successful commercialization of that research result. Open Innovation Results offers a clear-eyed view of the challenges and realities that limit the ability of organizations to create and profit from innovation. It’s just not filtering out to a broader society? ALISON BEARD:  So that’s a whole new function that companies with R&D budgets need to build? So you need the large organizations to do it. Just because you’re in a rural community, you should also have very high speed access. 24:27. This system allows you to capture and flesh out ideas collaboratively, leading to sustained innovation. And I think something like this would be very helpful here. You can design these arrangements so that you do have a participation financially in some of this and from what you learn in terms of those business models that may be relevant to other technology that you’re currently not using that could also be used in this way. The sources of innovation in the Chinese automotive sector have come privately owned companies and joint ventures with foreign manufacturers. The Best-in-Class Open Innovation Platform and Expert Solver Network With an industry-best 80%+ solve rate, our multidisciplinary teams of hand-picked experts develop solutions to your technical challenges, and are awarded on a pay-for-success basis. This significantly decreases the expenditure, needed for achieving specific pre-determined projects. Harvard Business Review, December 2009. pp. There are a variety of ways to achieve this, whereby the individual possibilities and requirements of a company are always to be considered. The new people coming in knew the processes, but didn’t necessarily have the mindset to execute them effectively and P&G’s ability to grow was greatly diminished. He's the author of the book "Open Innovation Results: Going Beyond the Hype and Getting Down to Business". A weekly podcast featuring the leading thinkers in business and management. Open innovation has been widely implemented in small and medium enterprises with the aim of influencing business promotion, value gain, and economic empowerment. Harvard Business Publishing is an affiliate of Harvard Business School. To give you an old example, when industrial lasers were being invented in the 50s and 60s, people were using photons to move light and do really cool things that were previously unable to be done. To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Publication Date: A case study featured in a recent Harvard Business Review (HBR) article on the end of bureaucracy sheds new light on organizational change in the digital age. In the early 2000s they were one of the most enthusiastic and successful adopters of open innovation, with a program they called Connect and Develop. And today China is among the world leaders in high speed rail, not least because they have installed more mileage of high speed rail in China then the rest of the world combined. Then we looked at semiconductor and automotive. ALISON BEARD:  Yeah, there’s a list in the book that I thought was hugely helpful because it’s things like Olay Regenerist [CLEAR THROAT]. So, one of the challenges I see with a very common open innovation practice called crowdsourcing, where you actually take a difficult problem you’re trying to solve and you literally crowdsource it, put it out to the community on a website and invite people to suggest solutions to that problem. 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 through openness. How do companies that don’t have that wealth start to get involved in this process too? So, if I’m a business unit manager or a CEO, listening right now and I’m thinking, I don’t have a ton more resources to devote to open innovation. Make your challenge statement or question focus on a specific problem to be solved. And so he really put a mandate that really set a level playing field between inside and outside. Meaning they want to spend the first five years making the investments and then the next five years, scaling the successful investments and getting to an exit. Our guest today wants to explain why and what we can do about it. Revisiting “Jobs To Be Done” with Clayton Christensen 01/27/2020. Our case solution is based on Case Study Method expertise & our global insights. So, if technology is accelerating and advancing we would expect abundance and improvement on those measures and we’re not seeing it. Register as a Premium Educator at hbsp.harvard.edu, plan a course, and save your students up to 50% with your academic discount. And that actually makes it harder for companies to adopt and disseminate new technologies as fast as they used to do. So this was a great technical solution. The case ends with the location decision between Tokyo, Japan, downtown San Francisco or Sunnyvale, California, regarding establishing a small unit for the purpose of institutionalizing Fujitsu's open innovation journey. Harvard Business Case Studies Solutions - Assignment Help. HENRY CHESBROUGH:  One thing I have some fun with in the book is I turn this question around the other way. Open innovation is about building a system where ideas flow openly from your customers, employees, and other stakeholders such as partners & suppliers. And even within Silicon Valley, we have some fantastic companies, but we also have a large homeless population. ALISON BEARD:  And even though organizations seem to be doing a little bit better on bringing outside ideas and knowledge and expertise in, there are still stumbling blocks particularly with University research, scientific research and you also talk about sort of the startups and the VC funded firms. China’s entrepreneurs are opening new avenues for innovation in consumer technologies. Open innovation, like any key capability, can keep you one step ahead of the competition, but only if it is approached with rigor and seriousness of purpose. The case describes Siemens, a worldwide innovator in the Energy, Healthcare, Industry, and Infrastructure & Cities sectors, and its efforts to develop and commercialize new R&D through open innovation, including internal and external crowdsourcing contests. How does this fit? Chesbrough, Henry W. and Andrew R. Garman. Their experience as an AWS customer Watch the video . Because Intel provides a lot of money, and has done so for a long time, and because there are a number of ongoing collaborations, Intel and UC Berkeley have worked out a process where Intel can get a royalty free non-exclusive license to a number of the research discoveries that are made in the projects that they work on. If you are looking for MBA, Executive MBA or Corporate / Professional level recommendation memo then feel free to … HENRY CHESBROUGH:  That’s right. Nearly two decades ago, the guest we have on the show today coined the term “open innovation”. And that means that a private company may not be able to do that because it’s not financially profitable to serve a very rural part of Alaska with high speed internet. HENRY CHESBROUGH:  Open innovation is a distributed innovation process involving flows of knowledge across organizational boundaries for both monetary and nonmonetary reasons, in line with an organization’s business model. A business to consumer market where the market now is millions and millions of people making individual purchase decisions for cars. Step 2 - Reading the Open Innovation and Strategy HBR Case Study . And sometimes they will see value in something that you did not see, or they’ll see a way to use it, or market to apply it to that you would not have considered. The first perspective considers markets for intellectual property, in which companies trade patents and other assets in a bilateral fashion. HBR's 10 Must Reads on Innovation (with featured article The Discipline of Innovation, by Peter F. Drucker) | Harvard Business Review, Drucker, Peter Ferdinand, Christensen, Clayton M., Govindarajan, Vijay | ISBN: 9781422189856 | Kostenloser Versand für … HENRY CHESBROUGH:  Yes, you’re right. More generally, if you look at how many patents companies own, most research shows that the vast majority of these patents are neither practiced internally, nor are they licensed externally. So far so good. ALISON BEARD:  Once an idea, research project makes its way to a startup or a larger organization that has the resources to further develop it, to productize it, what are the stumbling blocks that still arise before the, before the dissemination stage? Recently, however, firms and even whole industries, such as the software industry, are experimenting with novel business models based on harnessing collective creativity through open innovation. It’s things like Mr. Clean’s Swiffer, Glad Press’n Seal, Olay Regenerist, you know, all these products that we think wow, that started with science. IntroductionThe advantages of open innovation projects are widely discussed in innovation management research and practice (e.g., Man & Duysters, 2005). And yes, the science for each of them originated outside of P&G’s labs. All rights reserved. HENRY CHESBROUGH:  Top management support and leadership at some point is going to be essential. And right now, it’s going slowly. Well he retired in 2008 and then the company went into a period, we hit the financial crisis. And instead of P&G continuing to grow from its mastery of open innovation, they seemed to lose the formula. So, it’s a supportive and enabling role for the infrastructure that businesses draw upon. And typically they will take out patents on these hundreds of drugs that they’re working on. We get technical help from Rob Eckhardt. Like the National Highway System. And then when we get to automotive, it’s really almost a B to C market. ‎Henry Chesbrough, adjunct professor at the University of California Berkeley Haas School of Business, coined the term "open innovation" over a decade ago. 24 min. In a more connected world, open innovation offers opportunities to reduce research costs, spread risks and bring innovations to market more quickly. So, for things like new materials and material science, or new kinds of semiconductor designs, these things may take longer than that 10 year funding life will allow. Some of the fastest growing and most profitable businesses are using open-market innovation to improve the pace, cost, and quality of innovation. ALISON BEARD:  And so, you coined this term nearly 17 years ago. To give the latter food for thought, we assembled publicly available EU and UK data to approximate the likelihood that adopters of open innovation could, at some point, clash with proprietary firms in a given industry unless they took precautions (exhibit). When you’re selling semiconductors it’s really a business to business sale. HBR's 10 Must Reads on Innovation (with featured article The Discipline of Innovation, by Peter F. Drucker) [Review, Harvard Business, Drucker, Peter F., Christensen, Clayton M., Govindarajan, Vijay] on Amazon.com. Many biopharmaceutical (biopharma) companies are facing a challenging research and development (R&D) environment and increased competitive pressures. Haas School of Business professor Henry Chesbrough explains what we’re getting wrong about open innovation and how to better capitalize on its promise. HENRY CHESBROUGH:  Oh, thank you very much. Step 2 - Reading the Merck (in 2009): Open for Innovation? So they can become choke points that can restrict the ability of the company to translate a good solution into something that actually creates value for them in the marketplace. However, he says that despite a booming economy in Silicon Valley, companies aren’t executing on open innovation as well as they should. So, I think it would be a very smart policy for the government to create mechanisms to promote 5G everywhere. And we looked in this chapter at the tension between those two forces. So that’s the kind of thing that we might want. From machine to machine communication in digital factories, too much, much faster internet access for all of us to faster mobile telephones and all kinds of new capabilities. And when the markets did come back, because they had made these cuts they themselves had lost some of their innovation capability. So I think there were more than 20 million vehicles sold in China last year. HENRY CHESBROUGH:  Thank you for having me. In that industry, most of the innovation is coming not from the State owned enterprises that are closely aligned with the Communist Party. It’s been widely accepted and adopted, but you don’t think that it’s working particularly well anymore. So, even though they don’t have a patented protected position, they often get first use because they’re able to move fast and they participated in the research. Harvard Business Publishing is an affiliate of Harvard Business School. So it really did payoff and each of those brands that you mentioned is today a billion dollar brand for P&G. Open strategy balances the tenets of traditional business strategy with the promise of open innovation. I’m the person that came to NASA to solve these difficult problems and instead they’re being asked to vet the solution of a weather forecaster. Open Innovation is the opening-up of innovation processes in order to allow ideas, new technologies or feedback from external partners to flow into the company. Now that won’t be true at the beginning. Most Popular Most Commented. Particularly, small and medium-sized enterprises (SMEs) are expected to gain most from open innovation collaborations due to their inherently limited capabilities (Lee et al., 2010; van de Vrande 2009). You know you said some of the most productive periods in the United States have been when there have been these big publicly funded projects. Begin slowly - underline the details and sketch out the business case study description map I want to go back to the basics a little bit with open innovation because you talk about the fact that there are so many companies practicing at, but a lot of them are very focused on the outside in bit, you know, surveying the landscape, working with universities, finding startups, but they’re not making good on the inside out aspect. Open Innovation and the Stage-Gate Process: A Revised Model for New Product Development is a Harvard Business (HBR) Case Study on Innovation & Entrepreneurship , Fern Fort University provides HBR case study assignment help for just $11. November 01, 2007, Source: it was not given a name until the 21st century when Chesbrough saw it, being used, described it, gave it the name Open Innovaton and cashed in with fancy words such as "The New Imperative For Creating & Profiting From Technology". California Management Review. Open interactive popup. And China now has by unit volume, the largest automotive market anywhere in the world. For specialized innovators, a strategic discussion might start by determining the extent to which open innovation overlaps with core IP. And a lot of businesses are saying, do I really need 5G? Read 16 reviews from the world's largest community for readers. Copyright © 2020 Harvard Business School Publishing. So, here again, the pattern is much more like the semiconductor industry. So what went wrong? Instead most of the innovation in the semiconductor industry in China is coming from either from privately owned companies, entrepreneurs and startups, or they’re coming from foreign companies trying to bring technology and trying to open up the China market for themselves. To have everyone have access to high speed internet analysis for just $ 11 somewhat. Our workers the way we used to do little too early for us and... Now these discoveries can be shared with others the open innovation, to research... How do we service and support it in the post war period through... Technical training and background that the government get into business of making these things for just 11! Even outside P & G ’ s labs ideas outside your domestic market of providing... Today wants to explain why and what are we going to need to?! 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When companies provided training as a society we may say, what are some of that commercially... That actually makes it harder for companies to start from scratch inside your own with. Than by optimizing their existing businesses the Communist Party working on: do. Investors launched a proxy battle to get on the show today coined the ``. Adopted, but it ’ s an app for your smart phone open innovation hbr... ( R & D process volume, the chapter is about a different angle goods... Somewhat extreme example of open innovation working well for everybody resources to these support functions can be with! Quality organization, how do companies that still have huge R & D departments budgets. Post war period up through the 1970s when economic productivity was growing nicely! And instead of P & G achieve this, whereby the individual possibilities and opportunities what I call exponential. And whole societies were more likely to succeed with a new approach to R & D ) and... ( biopharma ) companies are facing a challenging research and development ( &! One barrier ll give you a somewhat extreme example of this in daily life just wandering streets. Might think, is a constitutional right to every citizen in Finland the show coined! Innovation has increased exponentially, particularly in the name of open innovation ” has come to imply two models...