Open Innovation: An Paradigm Shift for Sustainable Brand Pioneers - Henry Chesbrough

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Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal value creation, and expand the markets for external use of innovation. The paradigm assumes that for invention and scientific advancement, firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology. Dr. Henry Chesborough provides a look at the idea of open innovation as a backdrop to this year's launch of GreenXChange, an open sustainable intellectual property platform and coalition launched at Davos in January.

Published in: Business, Technology

Open Innovation: An Paradigm Shift for Sustainable Brand Pioneers - Henry Chesbrough

  1. 1. Open Innovation: An Apropos Paradigm Shift for Sustainable Brand Pioneers Dr. Henry Chesbrough Center for Open Innovation, UC Berkeley
  2. 2. Open Innovation: A Sustainable Paradigm for Industrial Innovation Henry Chesbrough Center for Open Innovation UC Berkeley June 8, 2010
  3. 3. The Current Paradigm: A Closed Innovation System Science & Technology The Base Market Research Development New Products & Investigations /Services R D 3
  4. 4. The Invention Perspective “The key [to success] is to find a man of genius, give him money, and leave him alone.” James Conant, former President, Harvard Univ. “The best way to predict the future is to invent it.” Alan Kay, computer scientist 4
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  7. 7. Diminishing Economies of Scale: US Industrial R&D by Size of Enterprise Company Size 1981 1989 1999 2007 < 1000 employees 4.4 % 9.2% 22.5% 24.0% 1,000 – 4,999 6.1 % 7.6% 13.6% 15.3% 5,000 – 9,999 5.8 % 5.5% 9.0% 8.4% 10,000 – 24,999 13.1% 10.0% 13.6% 17.1% 25,000 + 70.7% 67.7% 41.3% 35.2% Sources: National Science Foundation, Science Resource Studies, Survey of Industrial Research Development, 1991, 1999, 2001, 2007. 7
  8. 8. Merck’s Conclusion “Merck accounts for about 1% of the world’s biomedical research. To tap into the other 99%, we must actively reach out….” “The cascade of human knowledge flowing from biotechnology and the unraveling of the human genome… is far too complex for any one company to handle alone.” 8
  9. 9. The Open Innovation Perspective “Not all the smart people work for you.” Bill Joy, founder of Sun, currently VC 9
  10. 10. Open Innovation Other firm´s market License, spin Our new out, divest market Internal technology base Internal/external Our current venture handling market External technology insourcing External technology base
  11. 11. Is the internal R&D department now obsolete? • No – open innovation can leverage internal R&D • But….. • New focus: must look outside as well as inside • New role: connecting to and collaborating with the outside • New skill: integrating internal and external together 11
  12. 12. The Climate Change Crisis • Copenhagen intended to be successor to Kyoto protocol • Disputes over emissions targets… • …. and over access to the IP and technology to achieve them! • Proposals of $100 billion + in tech transfer funds are ill-suited to the times • Can Open Innovation help? 12
  13. 13. 2 years. 95 patents.
  14. 14. Sustainability Patents Greentech / Sustainability patents represent a small portion of the overall portfolio of the average company. And most companies have little skill or experience in licensing or sharing them
  15. 15. All Patents are not Equal Core Patents Important Patents Other Patents
  16. 16. Guard Closely Share Selectively Core Patents Important Patents Other Patents Share Broadly
  17. 17. Businesses Control the Use of Their Green IP • Retain the essential rights inside the core business • Use a standard offer to license the rights via automated transactions • Determine exceptions to licensing requirements – research – geography – field of use – etc….
  18. 18. The Business Benefits of Sharing or Exchanging Green IP • Greater usage of technology to lower costs • Establish a technical standard to influence the future development path • Incremental revenues from licensing outside of your business • Stimulate greater research activity in areas of value to your business
  19. 19. Open Innovation and Green Exchange • Private reasons to share or exchange Green IP – Good business, not just good publicity • No government action required – Though policy can help stimulate the process… • Developing nations need not pay for all IP rights – Exchange, share, or license just those they need • Developing nations innovate too – And these can be shared with other developing countries
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  21. 21. Photo Credits Flickr: Chess/Fox, Tuesday Night Poker/Rambis, Ryan Air/ezreenphotography, Ryan Air New Boeing 787 Colours/macrodebs, 332/265/Digg Pirate, The bus shelter at the edge of the ocean/goddess_spiral, Flickr treo ad/Steve Rhodes, Technology - "Future Vision“/$ydney iStockphoto: 000003004014, 000003062424, 000004293861, 000007135639, 000005589058, 000000718722 iPod photo: http://www.apple.com/ipodclassic/ 24

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