Wednesday, March 15, 2006

Open Innovation in Practice

This week, I had the great fortune to meet the father of Open Innovation, Henry Chesbrough. For such a successful guy, he is very personable, down-to-earth, and funny.

I reconfirmed with him that a full commitment to Open Innovation means a company exchanges intellectual property bidirectionally. In the past, a company could be viewed as a closed system with a few, carefully controlled entries and exits. In the true spirit of Open Innovation though a company's borders become semi-permeable with exchange happening at unplanned intervals when the need arises to foster innovation.

In practice, companies have a long way to go before the semi-permeable membrane can be realized. Most of the companies I've heard practicing Open Innovation are only practicing it uni-directionally. Either they are trying to out-license their technology or find opportunities to in-license. Running true Open Innovation requires a new mode of operation that very few companies have tried and fewer have mastered.

Open Innovation holds tremendous promise and companies seeking its benefits would be wise to tackle these challenges.

For a case study on a company that is well underway to execute an Open Innovation strategy, see the recent HBR case on Procter & Gamble's Connect + Develop capability.

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