The Open Innovation Guru: A Discussion with Henry Chesbrough

By: Paul Hobcraft

Henry Chesbrough continues to be an influential voice in open innovation. Paul Hobcraft caught up with him on a recent trip to Denmark – and sought clarity on Henry’s latest work in open service innovation.

I see Henry Chesbrough partly as a detective. As I have read his different books he has written I have realised they are often ‘pointers’ to new concepts and ideas. He sees new strands and clues that come together to form a new theory. They are often not prescriptive but do illuminate different themes which then he sets about to prove.

He feels many of his academic colleagues stay too much in the theory only, and often their investigations and exchanges stay within their academic worlds. They are constantly exchanging and building on each other’s work but it often only meaningful to academics amongst themselves.

Henry Chesbrough sees his role as spotting emerging issues that seem to be in conflict or ‘out of whack’ with academic work, or are elements of an emerging theory that need pulling together. Firstly he tries to unravel them, then to develop a new set of theories and hypotheses that relate more to what is going on in the world of practice.

He uses as an example for exploring the world of services and innovation, Michael Porters famous value chain, where it places service seemingly more as an afterthought, at the end of the manufacturing cycle, more placed there to deal with the after-service issues.

Today most developed economies can have up to 80% of their economic activity in services, so it is far from an afterthought. Porter’s model was not a service orientated model meeting today’s business need, it needed deeper investigation.

Professor Chesbrough saw that many organisations have already made a move from being a product focused company, with service as this afterthought into one having a very service-focused business model that increasingly drove its business. Notably IBM, HP, Xerox, GE, Nokia, Apple are all examples of this increasingly deliver through services, the more knowledge-intensive services, that are increasingly the engines of growth. He felt this required framing.

Academic community and evidence of the world

Although there is a thriving academic community working on many of the services issues they still have not been able to pull this together and translate it in a way the business organization can bring  into practice to manage their rapidly developing service-focused business model. Chesbrough’s latest book “Open Innovation Services” attempts to fill that gap. As he said “the companies are doing the moving and I’m making sense of it through a broader interpretation”

By bringing together the evidence of the world as it is happening and then tying this back to this diffuse set of academic activity in new ways moves theory and economic activity into a language for the business community to understand this so they can translate this into a model. He then can offer the conceptual framework that can build even further from this theory into new business applications to tackle the complexity of issues in this rapidly growing service economy.

 

Is Henry Chesbrough pushing Open Innovation too far?

When I originally reviewed Henry Chesbrough’s latest book I raised a series of concerns.

1. When you have a movement like ‘open innovation’ you run the danger of pushing the concept too far or rationalising other movements into your own framework to readily. Have you probably done that here with Open Innovation Services?
2. There are many ‘open’ questions still to be addressed for our present understanding of open innovation still to be fully embedded even today, a good eight years since it was first proposed?
3. It might have been healthier for you to address these legacy issues from his knowledge, understanding and exposure rather than pushing the ‘open’ paradigm even further right now?

Professor Chesbrough tackled these in an interesting way

• Firstly it is the companies that are pushing the boundaries of open innovation, he often is responding and learning from these and then attempting to offer these insights to a broader community. He agrees the curious, the evangelists of open innovation, have gained good practice and understanding but in his view it is far from done.  For example in his estimate nearly 80 to 90% of all the open innovation activity is ‘outside-in’. The vast majority of the service providers concentrate on this aspect but within his original book he equally suggested the huge value of ‘inside-out’ and this is still much underrepresented in today’s organizational thinking. Also his further book on Open Business Models as part of the OI equation still has not the position it ought to have for many organizations. Although this is rapidly changing as understanding the impact on a Business Model is being increasingly recognised in the last year or so.

• He does agree by providing a more conceptual book it can often create difficulty in the language of interpretation but as he then goes onto say “we may never have seen the wonderful surprises of where OI has gone” so he is “quite happy for this”. Again in his words “he never imagined in his wildest dreams that eight years on there would still be conferences about open innovation and a whole movement has build around it”. He had no inkling of what was to unfold when he looks back. He wondered what would have happened if it “had been shrunk to a given set of tools” if it would have blossomed as well? Equally “not all the smart people are me” and allowing them to take this concept and push it in the different ways is most probably seen a better result.

• He agrees with my suggestion that there have been far too many conferences, articles, papers on (re)defining the meaning within OI, often creating extended debating points, instead of simply experimenting and exploring. Often the original suggested aspects have been lost or brushed over. He concerns himself that consultants although they have more face-to-face time with clients have no real interest in theory and push certain aspects that fit their narrower view.

• Professor Chesbrough is presently pulling together a web site in collaboration with Prof. Dr. Wim Vanhaverbeke that tries to bring all the academic papers published on one reference site. They are also building a case study library and will continue to build from this to help in this legacy issue. This is presently through Exnovate,  a recently established Network of Excellence on innovating, using technology from external sources; The Network connects companies, the academic world and public authorities interested in the management and organization of open and collaborative innovation. This is more drawn from the open innovation practices around opening R&D and the body of reference work books and academic papers that has been published from this 2003 to 2010 period.

Is there a need to do this knowledge capture differently for Open Services Innovation?

The four concepts outlined in his book are bold and certainly radical in their strategic implications and might be not wise to be left as open for others to ‘fill in’. These are:

1. Think of your (existing) business as an open services business in order to create and sustain differentiation in a commodity trap world.
2. Invite customers to co-create innovation to generate (new) experiences they will value and reward.
3. Use Open Service Innovation to help you turn your business into a platform for others to build on.
4. Transform your business model with Open Services Innovation to profit from building a platform business model so you can gain from others’ innovation activities as well.

Each of these needs a deeper clarification, definition and expansion. As Professor Chesbrough points out there are excellent academic work in most of these areas but it is not in one place. There are some excellent books written on subjects relating to these that need re-discovering or referencing more. There must be a clear argument to pull this disparate knowledge together for the broader community benefit?

Who better to organise it!

By Paul Hobcraft