open innovation
Chapter 1
Open Innovation: A New Paradigm for Understanding Industrial
Innovation
Henry Chesbrough
Executive Director
Center for Open Innovation, IMIO
Walter A. Haas School of Business, F402
University of California, Berkeley
Berkeley, CA 94720-1930
Office: 510 643-2067
FAX: 510 642-2826
October 26, 2005
To appear in
Henry Chesbrough, Wim Vanhaverbeke and Joel West, eds.,
Open Innovation: Researching a New Paradigm, Oxford University Press (2006)
1
Defining Open Innovation
The open innovation paradigm can be understood as the antithesis of the traditional vertical integration model where internal R&D activities lead to internally developed products that are then distributed by the firm. If pressed to express its definition in a single sentence, open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open
Innovation is a paradigm that assumes that 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. Open Innovation processes combine internal and external ideas into architectures and systems. Open Innovation processes utilize business models to define the requirements for these architectures and systems. The business model utilizes both external and internal ideas to create value, while defining internal mechanisms to claim some portion of that value. Open
Innovation assumes that internal ideas can also be taken to market through external channels, outside the current businesses of the firm, to generate additional value.
The open innovation paradigm treats research and development as an open system. Open
Innovation suggests that valuable ideas can come from inside or outside the company and can go to market from inside or outside the company as well. This approach places external ideas and external paths to
Open Innovation: A New Paradigm for Understanding Industrial
Innovation
Henry Chesbrough
Executive Director
Center for Open Innovation, IMIO
Walter A. Haas School of Business, F402
University of California, Berkeley
Berkeley, CA 94720-1930
Office: 510 643-2067
FAX: 510 642-2826
October 26, 2005
To appear in
Henry Chesbrough, Wim Vanhaverbeke and Joel West, eds.,
Open Innovation: Researching a New Paradigm, Oxford University Press (2006)
1
Defining Open Innovation
The open innovation paradigm can be understood as the antithesis of the traditional vertical integration model where internal R&D activities lead to internally developed products that are then distributed by the firm. If pressed to express its definition in a single sentence, open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open
Innovation is a paradigm that assumes that 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. Open Innovation processes combine internal and external ideas into architectures and systems. Open Innovation processes utilize business models to define the requirements for these architectures and systems. The business model utilizes both external and internal ideas to create value, while defining internal mechanisms to claim some portion of that value. Open
Innovation assumes that internal ideas can also be taken to market through external channels, outside the current businesses of the firm, to generate additional value.
The open innovation paradigm treats research and development as an open system. Open
Innovation suggests that valuable ideas can come from inside or outside the company and can go to market from inside or outside the company as well. This approach places external ideas and external paths to