Open Business Models: How to Thrive in the New Innovation Landscape (Hardcover)

In his landmark book Open Innovation, Henry Chesbrough demonstrated that because useful knowledge is no longer concentrated in a few large organisations, business leaders must adopt a new, “open” model of innovation. Using this model, companies look outside their boundaries for ideas and intellectual property (IP) they can bring in, as well as license their unutilised home-grown IP to other organizations.

In Open Business Models, Chesbrough takes readers to the next step—explaining how to make money in an open innovation landscape. He provides a diagnostic instrument enabling you to assess your company’s current business model, and explains how to overcome common barriers to creating a more open model. He also offers compelling examples of companies that have developed such models - including Procter & Gamble, IBM, and Air Products.

In addition, Chesbrough introduces a new set of players—“innovation intermediaries”—who facilitate companies’ access to external technologies. He explores the impact of stronger IP protection on intermediate markets for innovation, and profiles firms (such as Intellectual Ventures and Qualcomm) that centre their business model on innovation and IP.

This vital resource provides a much-needed road map to connect innovation with IP management, so companies can create and capture value from ideas and technologies—wherever in the world they are found

From the Author
On the value of Innovation and Business Models:
"Innovation is often expensive, but consider how expensive it would be to stop innovating. The key is to make innovation more effective by extending it to business models.... Business model innovation must be the job of every senior manager."

On unused ideas and technology:
"Unused ideas abound in many companies. When Procter and Gamble surveyed all the patents it owned, it determined that about 10 percent of them were in active use in at least on P&G business, that the remaining 90 percent of patents had no business value of any kind to P&G."

On the human cost of unused ideas and technology:
"....many of the ideas people work on are never deployed in the market. It is reportedly quite common for a pharmaceutical researcher to never see one of her projects ship to market, even over a thirty year career, because the attrition rate of compounds is so high. This is an enormous waste of human talent and must take a toll on any person's initiative."

On Closed Innovation models vs. Open Innovation models:
"In the Closed Innovation model, companies had to take their new discoveries to market themselves for two reasons: first, because they would obtain more money that way; and second, because there weren't many other companies that knew enough to use the technology successfully. Intermediate markets for innovation in the Closed Innovation system were sparse. In an Open Innovation world, where useful knowledge is widespread, there are many companies with many potential technologies that might be utilized in a company's business model. No company can hope to exploit all of the many ways a new technology might be used, so Open Innovation companies typically license technologies liberally to other companies. This creates a secondary market for innovations."

On Dell and Wal-Mart:
"...companies like Dell and Wal-Mart do not invest much of their own money in product innovation. Each company, however, is a leader within its industry on process innovation, which is at least as important to future success as product innovation."

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