THE FUTURE, - Solvay

REPoRt > Innovation elsewhere
open innovation
the new paradigm
FOR DR. HENRY CHESBROUGH OF THE UNIVERSITY OF CALIFORNIA, INNOVATION IS THE MOST
IMPORTANT SOURCE OF ORGANIC GROWTH WITHIN A COMPANY.
Solvay live – Dr. Chesbrough, how
would you define ‘Open
Innovation’?
Dr. Chesbrough – Using external
ideas and technologies in your own
company; allowing unused internal
ideas and technologies to be used
by others in their companies; and
finally, having a business model that
determines what external ideas to
bring in and what internal ideas to
let out.
SL – Why is this so important?
Dr. C. – Innovation is the most
important source of organic growth
for a company. It helps grow
revenues and reduce costs by
improving the internal operations
and by increasing the overall
circulation of ideas and
technologies. Limited investments in
new fields should also be made,
since it is from today’s innovators
that the market leaders of tomorrow
will be found.
SL – What do you see as the main
challenges facing a traditional
company?
Dr. C. – Many companies have great
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success with a ‘closed innovation
model’ in which the flow of internal
ideas allows them to develop new
products and businesses,
generating great pride in the internal
R&D process but creating resistance
to using external ideas. In a ‘closed
model’ all the decisions for R&D
activities are made at the budgeting
stage in a top-down manner whilst
in the ‘open model’ the ideas and
decisions are made at the periphery
of the corporate ecosystem – often
with outside partners over whom we
have no control.
SL – Have you an example of open
innovation that might apply to us?
Dr. C. – Air Products developed a
technology to incinerate the waste
products of their processes but the
internal business units of the
company did not wish to spend the
money to install it in their plants.
The technology therefore was
licensed out. The licensee then
started to make money (thus
externally validating the technology)
and it was only then that Air
Products businesses decided to use
it themselves.
Best known for his book Open Innovation: The New
Imperative for Creating and Profi ting from Technology,
Dr. Henry Chesbrough is the Director of the Center for
Open Innovation at the Haas School of Business at the
University of California at Berkeley, which he joined in
2003 after six years teaching at Harvard Business School.
His most recent book is Open Business Models (2006).
Experience shows that tough times
tend to push companies into
exploring such new innovative
business models.
SL – Have you a particular
recommendation for us?
Dr. C. – Perhaps the most important
is to understand the IP (intellectual
property) ‘deadweight loss’ in the
company, by looking at what
percentage of Solvay’s patents are
actually being used in one or more
of the company’s businesses.
Unused patents are underutilised
resources that could become
revenue generators if released to
the outside world. As in the Air
Products case, they may even
provide external validation of
underappreciated internal
technology.
“Innovation
is the most
important
source of
organic growth
within a
company.”