Posts Tagged ‘Open Innovation’

 

I am watching the video right now, so I will blog on it properly in a while. Chesbrough’s talk begins 21 minutes into the video and spans to 1 hour and 5  minutes of it.

 

Creative Commons Salon: Open Services Innovation from Creative Commons on Vimeo.

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We, at the London School of Economics and Political Science, are involved in a study that will provide an independent evaluation of the possible savings to Government through the targeted use of free/open source software (FOSS), differentiating between short, medium, and long term savings. OpenForum Europe (OFE) approached the LSE researchers to undertake this study focusing on the total cost of ownership and acquisition of FOSS. The prime rationale for such a study is that FOSS financial benefits are commonly claimed, but that independent evidence is only available by exception, and may be wrapped in supplier generated reference studies. This study is jointly funded by the UK Government, and the OFE.

Take me to the survey   

 

I recommend listening to the audio of a talk by JP Morgan Healthcare. The audience has very knowledgeable people, and company folk too. JP Morgan Healthcare Talk

Panel includes:

  1. Todd Park – CTO of HHS and co-founder of Athena Health
  2. Eric Schmidt – CEO of Google
  3. Aneesh Chopra – CTO of US
  4. John Doerr – partner at Kleiner Perkins

 

The audience is asked to structure the talk by setting up questions and points of discussion. They include:

  • Standardization of electronic medical records (EMR)
  • Government barriers and accelerators to electronic healthcare
  • The return on investment (RoI) of electronic healthcare
  • Accountability that needs to be expected not just from the government, technology, and healthcare providers but ALSO from the patients to provide accountable and correct information
  • What role is Google playing in electronic healthcare records (EHR), and provision? Should it play a role?
  • What is the biggest potential of the cloud in the provision and management of electronic healthcare by the government?
  • What is the role of open source in electronic healthcare?
  • What are the incentive schemes, and the greatest barriers to innovation coming from the government for electronic healthcare?
  • How do you ‘create’ change and enable it when healthcare providers and physicians seem resistant to change? And change management in general?
  • What, if any, role does social media and apps play in electronic healthcare provision?

Another interesting interview at the Web 2.0 Summit, 2010 was that of Mark Zuckerberg of Facebook. Some tricky questions are asked of him by Tim O’Reilly and John Battelle. I don’t find Zuckerberg’s answers very convincing, but that could just be me!

Nice, straightforward talk by Professor Henry (Hank) Chesbrough today on Opensourceway.com. (For audio recording please see: Open Services Innovation – Chesbrough). The talk was based on his new book Open Services Innovation.

Professor Gary Hamel was also present on the audio call talk. Chesbrough explained his new research and ideas that build on the idea of open services innovation rather than just product innovation. He began with some basics about what is innovation, and open innovation by explaining how nobody has a monopoly on great and new ideas, and how companies need to make more use of the ideas of others. He called for companies to liberate the material and ideas that are held internally with the rest of the world (so long as they are not your core competence, of course). If many companies followed such a model of sharing then we would see more innovation. Using the example of drug discovery he showed how the same discovery can help lead to the cure of more than one disease.

The larger problem here, he acknowledged was that companies and management are built to have an implicit logic of NOT sharing as internal promotion systems etc are all tightly linked to ideas of keeping information to yourself and not sharing. There is active discouragement of sharing.

Such a mindset and internal structures do not allow companies to change. Linking the idea of holding on to the status quo and non-sharing, Chesbrough brought the argument around to the big problem he sees in product innovation – It is limiting, or as he puts it, companies fall into the ‘commodity trap’. Commodity trap simply means that organizations become dependent on merely innovating the product internally. You are thus only as good as your next product. But what makes it harder to sustain differentiation and success is that you can only rely on internal ideas and innovation, and that too in the products area (limited to the design of your last product and how you will you upgrade it etc…. but also new products in a similar area). On the other hand Chesbrough’s research has shown that companies like IBM indicate that more than half of their profit comes from services (this was back in 2004). Why is this not matched with a focus on services innovation then?

Clarifying his ideas, Chesbrough explains that products are not important in themselves – it is the service they deliver that a customer wants. For instance a drill makes holes and it is the hole that the customer wants and not the tool per se. See his slide below on utilization differential.

Open services innovation is one way to avoid the commodity trap. Open services innovation implies building deeper relationships with your customers so you can find other ways of adding value and working closer with each other. He provides three different examples (from various industries to prove that his model does not only apply to technology – Amazon, El Bulli, and TSMC). Opening up your backend infrastructure leads to more innovation.

Some questions asked by the audience:

Q: How does open services innovation avoid the commodity trap?

Chesbrough: Open source business models allow for collaboration at one level and then competition higher up in the stack, the same is true for open services innovation.

Q: How do you differentiate in services models? (asked Chesbrough of himself)

Chesbrough: Services platforms!

Q: If I am in a traditional entrenched Fortune 500 company what do I do to make a change of such a drastic nature in my organization?

Chesbrough: Rethinking management in fundamental ways  is never easy. You could start with an experiment that you can control. Look to your customers for inspiration and observe how they use your products.

Q: How do I retrain my boss to exhibit values of open innovation?

Chesbrough: I feel the commodity trap example helps to dissuade managers from becoming too entrenched.

Q: How does one use the lessons of open innovation and translate them to social innovation?

Chesbrough: Use the platform to innovate with ideas, as you would for products and services.

Professor Gary Hamel asks Professor Chesbrough: Platforms are competing with each other like Apple versus Android (Google)? You say there is no longer a first mover advantage? So where is the advantage?

Chesbrough: We are not beyond competition. It is clearly not a first mover issue these days but companies can gain by building a more robust and faster working network.

Alpheus Bingham of Innocentive’s talk is quite interesting. He claims that the fundamental ways that open innovation (OI) can become transformative for a business are often ignored. His research has shown that this involves exploiting spot capacity, OI as a mechanism for risk distribution (financial, execution and scientific risk), and OI as a  misguided claim for diversity. When discussing spot capacity he shows through a simple use of Transaction Cost Theory how search costs and other costs related to making and post-making a transaction an organization needs to deal with are very high. However with OI this can be reduced. Risk distribution and diversity are highly linked. If an organization like a pharmaceutical company wants to find the cure for a rare disease the risk of failure will be quite high (Bingham uses Edison’s example of creating a lightbulb after having failed over a 1000 times). Shareholders of most companies are not happy to have their money ‘wasted’ on failure. In the case of OI the community takes on the risk of failure rather than one organization. By sending out an electronic call companies manage to get the attention of all the suppliers that will probably not have the people with the diverse skills that you need in order to innovate. By specifying such close criteria you strip out all diversity and thus endanger OI.  

In essence the field of vision for your company’s problem space includes scientific method, social search, and finally the open space of OI. All three have merit but they do not follow each other logically or chronologically. Sadly companies do not draw on a taxonomy of OI. Instead, they take OI as a broad field and engage in it and with it without realizing they do indeed need to have a clearer path to steer to make effective use of OI.