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strategy and business
 / Summer 2011 / Issue 63(originally published by Booz & Company)


The Thought Leader Interview: Henry Chesbrough

S+B: How would you compare the progress on open innovation with that of other management innovations, like, say, Six Sigma?
Open innovation is maybe eight years old. The ideas behind Six Sigma started in the U.S. and were widely ignored, and then some people in Japan got very interested and embraced the idea. Then, and only then, did Six Sigma come back into the United States. And my sense is that all of this was a 20- or 25-year process.

One thing that the Six Sigma folks have done that has not been done in open innovation is translating the general concepts — of statistical process control, the philosophy of doing it right the first time, eliminating waste, and so forth — into specific steps that you can take on a day-to-day basis. Those became the curriculum for the Six Sigma program. To my knowledge, that curriculum does not exist at this point in open innovation.

For open innovation to really have legs, there’s got to be a community of people, both in industry and in academia, promoting it. One of the things I’ve done, with a colleague at San Jose State, Joel West, is to create an open innovation site (, where we’re trying to create both a portal for information for industry managers and also a set of resources — case studies and academic journal articles, as well as other materials for academics — all in one place. I think the things that eventually made Six Sigma so prevalent will grow out of initiatives like this, where the community has a place to come look at all the work being done, and then from that can begin to build the methodologies that will get us to a certification kind of approach.

S+B: What about in academia? One of the striking things, reading the examples in Open Services Innovation, is that many of them — Taiwan Semiconductor, for example, as well as some of the others that focus on services at big companies — are not the examples you encounter in the standard works of the MBA curriculum.
Open innovation is making some inroads in business schools. At Berkeley, I teach this in the elective part of the MBA program. But when you get into our core strategy classes, these ideas are not yet in the core — and I think that’s how these things always start out.

One of the things I talk about in some detail in the book is contrasting the value chain that Michael Porter introduced in Competitive Advantage, which is product-driven, with an open services value chain. Porter’s value chain was an extremely important concept, and it’s still the standard taught in the MBA classroom when we think about strategy. But when you look at the diagram that illustrates it, you find that services is this little piece at the very end of the process, and it’s not the basis of competitive advantage. Competitive advantage is in the product side; that’s where you make the money.

I think that’s an outdated conception. I think services really are much more central and much more important for building competitive advantage than Porter’s value chain would suggest. So in that sense I agree with the premise of your question. I don’t know if it’ll be five years or 15 years, but we’ll be teaching these things in the core MBA curriculum before too long. And I have tried to populate the book with lots of examples from a number of different industries so that people understand this is not simply a view of “how do you innovate in a particular sector or a particular industry?” It’s actually already quite widespread in many, many different areas.

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