"What we need is a new logic of innovation. The era of developing innovative technology solely for your company's internal use is over." -- Henry Chesbrough, Exec. Director, Center for Technology Management, UC Berkeley, author of "Open Innovation: The New Imperative for Creating and Profiting from Technology"
Occasionally someone innovates the very discipline of innovation. Convergence 2004 keynote speaker, Henry Chesbrough, is one of those innovators of innovation and it's a gift to have him join us at Convergence.
The following is an excerpt from an interview with Optimize Magazine.
Q: What is open innovation, and how does it differ from closed innovation, which is what you say most companies do?
A: The basic idea is that in closed innovation, the model is one of discovering things yourself, then transferring them into development, production, distribution, service, and support within the four walls of your company. The logic is: If you want something done right, you've got to do it yourself.
But the idea behind open innovation is that there are too many good ideas held by people who don't work for you to ignore. Even the best companies with the most extensive internal capabilities have to take external knowledge and ideas into account when they think about innovation. So good ideas can come from outside as well as inside. And they can go to market not only inside your company, but also
outside, through others.
Q: The subtitle of your book states that open innovation is the "new imperative." Why don't the tried-and-true methods of innovating work anymore?
A: They did work very well for a long time and in a number of industries. It's the very success of the old way of doing things that accounts for its persistence today. Many people still consider Bell Laboratories to be the pre-eminent industrial research center in the world, and certainly in its heyday, it won an enormous number of Nobel Prizes and other scientific achievements. It made a lot of money, too, for the parent company. The reason that worked very well is that AT&T had a monopoly: It didn't have any effective
competition that could pilfer ideas from Bell Labs and take them to market. The competition would essentially wait until the technologies were already out of the laboratories to go into the market.
Of course, the scientists doing this work really didn't have many other places they could go to ply their craft. So the whole thing was a virtuous circle: As more technology came out, new products and services would be created; those would go to the market and create new revenues and new profits, which could be reinvested. So whether it was General Motors in the automotive industry, DuPont in the chemical industry, or AT&T or IBM in the computer industry, the companies that did the most research had the highest market share, the highest profits, and were able to reinvest and keep it going. It really did work very well for a long time.
We'd love to have you join us at Convergence This is the 10th annual conference of innovation practitioners and it's an incredible opportunity to exchange ideas with folks from organizations around the world.