Open Business Models

Henry Chesbrough lays out the case for adopting an open innovation business model:

Effective innovation increasingly means to do so openly, using transparent business models. Implementing an open business model represents a significant cultural break from most corporate traditions. Indeed, it may even seem counterintuitive — especially for CIOs who work diligently to protect the information resources and intellectual property of their organizations.

Until recently, innovation was a function of tapping into internal intellectual resources and nurturing the business while protecting it from outside exposure or interference. Companies have fiercely guarded their patents, trade secrets, and other intellectual property to leverage the most value from their own innovative efforts. Open innovation, by contrast, calls for companies to make much greater use of external ideas and technologies while sharing their unused ideas with others. This requires each company to open up its business model to let more external ideas and technology flow in and more internal knowledge flow out.

By adopting these models, organizations can bring innovations to market more quickly and less expensively, thereby securing a competitive advantage in an increasingly dynamic global economy. It’s critical for CIOs to understand these models’ disruptive implications and provide the infrastructure necessary for their companies to thrive in the new landscape.

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