Henry Chesbrough, executive director of the Center for Open Innovation at the Haas School of Business in the US, has called on technology, or product, companies to develop services to escape a "commodity trap".
In a presentation on the Management Innovation Exchange forum hosted by consultant Gary Hamel, Chesbrough said rather than services being the last thing in a value chain the model needed to be updated to create a services value web (click here to see graphic).
The model is part of Chesbrough’s forthcoming book, Open Services Innovation, released in January.
Chesbrough, who coined the term Open Innovation in a book in 2003, said: "Great ideas these days are everywhere. This is the principle behind open innovation and other ideas. It requires a change of mindset to make use of these ideas."
He said companies faced a "commodity trap" when the company was only as good as its next product. To "escape the trap" Chesbrough said companies needed to wrap services around a product, turn a product into a solution, co-create with customers in order to use openness to get more from specialisation and build a platform to attract others to the solution.
A solution rather than a product meant saying a customer wanted a hole rather than a drill that creates one, he added.
Chesbrough added that companies and managers needed to increase the utilisation of their assets by thinking how they could be used by other people and not necessarily bundling it into the product without a charge.
In answer to a question by Hamel, Chesbrough said companies needed to create a coalition of developers using its platform by sharing revenues.
Chesbrough’s definition of open innovation has been influential among management thinkers in the past near-decade and how it interacts with corporate venturing. Last week, the 19th annual Global Forum for information technology held its largest session on the subject, according to news provider ComputerWorld.
ComputerWorld said Europe’s Open Innovation Strategy and Policy Group found five elements in the innovation process:
1. Networking;
2. Collaboration involving partners, competitors, universities and users;
3. Corporate entrepreneurship, corporate venturing, start-ups and spin-offs;
4. Proactive intellectual property management to create markets for technology; and
5. Research and development for competitive advantage on the marketplace.