Chesbrough Book Explores New Frontiers in Open Innovation

British software developer Symbian beat Apple to market by five years by introducing an operating system for smartphones in 2002. Long before the first iPhone, Symbian built a network of partners and suppliers around its operating system that included the world’s largest maker of cell phones. By 2007, Symbian boasted a 63 percent market share.

Symbian appeared to have taken its strategy straight out of the open innovation playbook, a business strategy developed by Haas Adjunct Professor Henry Chesbrough, which asserts that “a company should make greater use of external ideas in its business and allow its own ideas to go out to others to use in their businesses.”

When multiple firms in a partnership cooperate to create value for customers, the partnerships succeed, argue open innovation theorists. That’s exactly what Symbian and its partners attempted to do. Yet by the end of 2014, the Symbian operating system had become so marginal that when IDG, a market research company, reported on the mobile OS market, it lumped it into the “other” category, with a share less of than half of one percent and the company itself no longer existed.

The story of the company’s precipitous fall is an important chapter in New Frontiers in Open Innovation (Oxford Press, 2014), a collection of analytical papers published late last year. It was edited by Wim Vanhaverbeke of the University of Hasselt, Joel West of the Keck Graduate Institute, and Chesbrough, who is also director of the Garwood Center for Corporate Innovation at Berkeley-Haas.

Chesbrough and his co-authors extend their analysis of open innovation to include socially focused non-profits, high-tech “platform” companies like Symbian, and the difficulties businesses have in capitalizing on the fruits of internal research and development that fall outside their core competencies.

In large part, Symbian’s failure can be blamed on a cumbersome network of customers (handset makers), who were also investors that hindered its battle for smartphone supremacy with Apple and Google, writes West.

Open Social Innovation

Students of management tend to focus upon the private benefits of innovation to consumers, producers, and investors while treating the overall social benefit “as an endnote for our papers,” notes Chesbrough in an essay written with Alberto Di Minin, a research fellow with the Berkeley Roundtable on the International Economy. Social change, not the simpler equation of profit and loss, is the yardstick by which social innovators need to measure their efforts, they write.

Emergency, an Italian non-profit dedicated to delivering top-quality emergency medicine in conflict zones, has had notable success operating in areas too perilous for most NGOs. In Afghanistan, for example, it operates three surgical centers, a maternity clinic, a network of 30 first-aid posts, and has performed more than 17,000 surgeries.

The 20-year-old organization exemplifies what the authors call an “inside-out, or outbound” open innovation strategy in which knowledge flows outward from an organization, as well as the better known “in-bound” open innovation strategy in which firms leverage external knowledge and technology to accelerate internal innovation.

One core principal of inbound open innovation is embodied in the expression “not all the smart people work for you,” write Chesbrough and Di Minin. In order to provide medical treatment to those in need, Emergency has to identify and rely on local suppliers and staff to support its activities, is sensitive to local customs and sensibilities, and is scrupulous about not taking sides in conflicts.

On the outbound side, Emergency’s exit strategy is to become redundant by transferring know-how and best practices to local institutions that can then assume its role.
When Chesbrough published his first work on open innovation in 2003, he proposed a number of “erosion factors,” such as increased mobility of workers and growing access to venture capital by startups that “undercut the logic of the prevailing closed innovation model.” A dozen years later, the rise of the Internet and social media have undercut that logic even further, as companies have access to more and better information from sources across the globe.

The new volume speaks to those changes and points to new areas of future research into open innovation.

In his new book, Haas Adjunct Professor Henry Chesbrough and his co-authors extend their analysis of open innovation to include socially focused non-profits, high-tech “platform” companies like Symbian, and the difficulties businesses have in capitalizing on the fruits of internal research and development that fall outside their core competencies.

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