November 10, 2009

Is open innovation universal? New OI puzzles

HenryI’m convinced that open innovation would not exist without a particular personality trait (quirk) of its inventor, Henry Chesbrough. I feel comfortable in speaking this way, since Henry reminded me the last time I saw him that we have been friends for a long time: we met at the 1996 Strategic Management Society conference in Phoenix as middle aged IT veterans en route to careers as b-school profs, although we got to know each other best during the period from 2004-2006 when we were working on the 2006 Oxford book with Wim Vanhaverbeke.

Based on indirect evidence, I suspect that Henry must have been exposed to too much Kuhn somewhere during his graduate school career. (The Structure of Scientific Revolutions was not published until 1962, so he couldn’t have been exposed in the womb). The Kuhnian model of anomalies leading to new science permeates his work, particularly in open innovation.

The original 2003 Open Innovation book was inspired by his studies of the puzzle of why Xerox PARC didn’t make more money from its many pathbreaking innovations. Unlike the guys who wrote Fumbling the Future, Henry concluded that Xerox learned from its mistakes and eventually developed a portfolio of strategies for monetizing inventions that didn’t its core business model.

More recently, he has been inspired by Donald Stokes and his book Pasteur’s Quadrant, a more recent re-interpretation of Kuhn’s model of scientific advance. Stokes’ point is that the most interesting research both contributes to scientific progress and has practical real-world utility.

Following the advice of Stokes, Henry believes that both open innovation — and the theories of innovation more broadly — benefit from a study of industrial practice. As he concluded in the opening chapter of the 2006 book:
The field of innovation studies arguably operates in Pasteur’s Quadrant (Stokes 1997), in that the processes and practices of industry actors often extend beyond the bounds predicted by academic theory. Close observation of the experiments that some of these firms have enacted reveals that the inwardly focused, vertically integrated model of industrial innovation so celebrated by Chandler (1990) and others has given way to a new, and not yet well-understood model (Langlois 2003a).
[2006 book]And so the second chapter of the 2006 book (which he also wrote) he called the chapter “New Puzzles and New Findings.” In the spirit of Kuhn and Stokes, both chapters identified anomalies in the practice of innovation that merited further investigation. In this same vein, the final chapter (written joint by all three editors) sought to identify other opportunities for future research.

In September, I was fortunate to be asked to present my own open innovation research at Henry’s Center for Open Innovation; the session gave a background on OI (and UI and CI) to the graduate students. The slides and a YouTube video of this (and other) talks are linked from the COI’s speaker series web page.

The discussion afterwards raised some interesting points, including some that might qualify as new puzzles also worth investigating.

One of the graduate students asked about how open innovation would happen in Korea — presumably a reference the dominance of the chaebol and the difficulty small businesses have getting a foothold. Another student asked about open innovation in India and China: certainly Chesbrough’s 2003 book (and Chapter 6 of the 2006 book, which draws heavily on it) would argue that licensing internal innovations depends on appropriate IP enforceability (consistent with Teece 1986), and the general belief is that such mechanisms are not as strong as in more developed countries.

I could imagine other factors about economic development, government policy or industry structure that would make open innovation more or less likely, but such causal relationships are empirical questions left to be studied.

So here are a few more puzzles I think worth investigating. In the spirit of Kuhn, Stokes and Chesbrough, perhaps they will inspire new research that increases our understanding of open innovation.

1 comment:

Unknown said...

Having hear Henry speak in Galway yesterday, a number of points struck me about his open innovation model and China, where I have been carrying out fieldwork with multinational R&D centres. It might be suggested that China has at least two models of innovation: one is the traditional closed model of MNCs exploiting talent, creating IP, and presumably investing heavily in R&D to remain dominant and seek to control the market. Then you have the great jungle of Chinese open innovation where IP protection is not highly rated.

What struck me was the growing fear among MNCs about their ability to compete with Chinese companies in the so-called 'good enough' market, which is growing rapidly with hundreds of millions of Chinese people seeking products without bells and whistles at reasonable prices. Can this new form of market radically impact on the old closed R&D model of innovation?